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Hedge Fund Consensus Stocks vs. Skyworks Solutions Inc (SWKS) In 2019

Reymerlyn Martin

We are still in an overall bull market and many stocks that smart money investors were piling into surged in 2019. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 57% each. Hedge funds' top 3 stock picks returned 45.7% last year and beat the S&P 500 ETFs by more than 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like Skyworks Solutions Inc (NASDAQ:SWKS).

Skyworks Solutions Inc (NASDAQ:SWKS) investors should be aware of a decrease in hedge fund sentiment in recent months. Our calculations also showed that SWKS isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

[caption id="attachment_339612" align="aligncenter" width="600"] Kerr Neilson of Platinum Asset Management[/caption]

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock is still extremely cheap despite already gaining 20 percent. With all of this in mind we're going to take a gander at the latest hedge fund action regarding Skyworks Solutions Inc (NASDAQ:SWKS).

How have hedgies been trading Skyworks Solutions Inc (NASDAQ:SWKS)?

At the end of the third quarter, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -23% from the previous quarter. By comparison, 25 hedge funds held shares or bullish call options in SWKS a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, AQR Capital Management held the most valuable stake in Skyworks Solutions Inc (NASDAQ:SWKS), which was worth $297.1 million at the end of the third quarter. On the second spot was Platinum Asset Management which amassed $202.4 million worth of shares. Arrowstreet Capital, Winton Capital Management, and Carlson Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Platinum Asset Management allocated the biggest weight to Skyworks Solutions Inc (NASDAQ:SWKS), around 4.53% of its 13F portfolio. Intrinsic Edge Capital is also relatively very bullish on the stock, designating 0.97 percent of its 13F equity portfolio to SWKS.

Because Skyworks Solutions Inc (NASDAQ:SWKS) has faced falling interest from the smart money, logic holds that there exists a select few money managers who sold off their positions entirely heading into Q4. It's worth mentioning that Israel Englander's Millennium Management dumped the largest position of the 750 funds tracked by Insider Monkey, worth close to $15.8 million in stock, and Kevin Cottrell and Chris LaSusa's KCL Capital was right behind this move, as the fund dropped about $11.6 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 7 funds heading into Q4.

Let's now take a look at hedge fund activity in other stocks similar to Skyworks Solutions Inc (NASDAQ:SWKS). These stocks are CenturyLink, Inc. (NYSE:CTL), DexCom, Inc. (NASDAQ:DXCM), Old Dominion Freight Line (NASDAQ:ODFL), and NVR, Inc. (NYSE:NVR). This group of stocks' market caps resemble SWKS's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CTL,28,1097755,1 DXCM,33,558258,3 ODFL,22,140882,-1 NVR,36,1162559,9 Average,29.75,739864,3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 29.75 hedge funds with bullish positions and the average amount invested in these stocks was $740 million. That figure was $691 million in SWKS's case. NVR, Inc. (NYSE:NVR) is the most popular stock in this table. On the other hand Old Dominion Freight Line (NASDAQ:ODFL) is the least popular one with only 22 bullish hedge fund positions. Skyworks Solutions Inc (NASDAQ:SWKS) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. A small number of hedge funds were also right about betting on SWKS as the stock returned 84.1% in 2019 and outclassed the market by an even larger margin. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

Disclosure: None. This article was originally published at Insider Monkey.

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