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Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Qorvo Inc (NASDAQ:QRVO).
Is Qorvo Inc (NASDAQ:QRVO) going to take off soon? The best stock pickers were selling. The number of bullish hedge fund positions dropped by 10 in recent months. Qorvo Inc (NASDAQ:QRVO) was in 41 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 51. Our calculations also showed that QRVO isn't among the 30 most popular stocks among hedge funds (click for Q1 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 monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Seth Klarman of Baupost Group
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we're going to check out the new hedge fund action regarding Qorvo Inc (NASDAQ:QRVO).
Do Hedge Funds Think QRVO Is A Good Stock To Buy Now?
At Q1's end, a total of 41 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -20% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards QRVO over the last 23 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Qorvo Inc (NASDAQ:QRVO) was held by Baupost Group, which reported holding $954.5 million worth of stock at the end of December. It was followed by Select Equity Group with a $231.4 million position. Other investors bullish on the company included Iridian Asset Management, Fisher Asset Management, and AQR Capital Management. In terms of the portfolio weights assigned to each position Panview Capital allocated the biggest weight to Qorvo Inc (NASDAQ:QRVO), around 8.95% of its 13F portfolio. Baupost Group is also relatively very bullish on the stock, dishing out 7.6 percent of its 13F equity portfolio to QRVO.
Due to the fact that Qorvo Inc (NASDAQ:QRVO) has experienced a decline in interest from hedge fund managers, it's safe to say that there were a few hedge funds that elected to cut their full holdings by the end of the first quarter. Intriguingly, Renaissance Technologies said goodbye to the biggest stake of the "upper crust" of funds followed by Insider Monkey, comprising about $68.2 million in stock, and Guy Shahar's DSAM Partners was right behind this move, as the fund said goodbye to about $20.8 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 10 funds by the end of the first quarter.
Let's go over hedge fund activity in other stocks similar to Qorvo Inc (NASDAQ:QRVO). These stocks are ORIX Corporation (NYSE:IX), Horizon Therapeutics Public Limited Company (NASDAQ:HZNP), Ingersoll Rand Inc. (NYSE:IR), Generac Holdings Inc. (NYSE:GNRC), Tractor Supply Company (NASDAQ:TSCO), Hewlett Packard Enterprise Company (NYSE:HPE), and Western Digital Corporation (NASDAQ:WDC). All of these stocks' market caps are closest to QRVO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IX,5,4886,2 HZNP,48,4177404,-7 IR,35,789022,1 GNRC,36,699301,4 TSCO,29,1191886,-10 HPE,27,1067351,-3 WDC,58,1913662,14 Average,34,1406216,0.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 34 hedge funds with bullish positions and the average amount invested in these stocks was $1406 million. That figure was $2330 million in QRVO's case. Western Digital Corporation (NASDAQ:WDC) is the most popular stock in this table. On the other hand ORIX Corporation (NYSE:IX) is the least popular one with only 5 bullish hedge fund positions. Qorvo Inc (NASDAQ:QRVO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for QRVO is 53.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th and beat the market again by 6.1 percentage points. Unfortunately QRVO wasn't nearly as popular as these 5 stocks and hedge funds that were betting on QRVO were disappointed as the stock returned -4.7% since the end of March (through 6/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.