Reputable billionaire investors such as Jim Simons, Cliff Asness and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won't accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
Skyworks Solutions Inc (NASDAQ:SWKS) investors should pay attention to a decrease in enthusiasm from smart money lately. SWKS was in 31 hedge funds' portfolios at the end of the second quarter of 2019. There were 38 hedge funds in our database with SWKS holdings at the end of the previous quarter. Our calculations also showed that SWKS isn't among the 30 most popular stocks among hedge funds (view the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Today there are tons of signals investors put to use to appraise their holdings. A duo of the less utilized signals are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the top picks of the top fund managers can outperform the broader indices by a very impressive amount (see the details here).
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to take a gander at the new hedge fund action regarding Skyworks Solutions Inc (NASDAQ:SWKS).
What have hedge funds been doing with Skyworks Solutions Inc (NASDAQ:SWKS)?
Heading into the third quarter of 2019, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -18% from the previous quarter. By comparison, 27 hedge funds held shares or bullish call options in SWKS a year ago. With hedge funds' capital changing hands, there exists an "upper tier" of key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
According to Insider Monkey's hedge fund database, AQR Capital Management, managed by Cliff Asness, holds the largest position in Skyworks Solutions Inc (NASDAQ:SWKS). AQR Capital Management has a $286.3 million position in the stock, comprising 0.3% of its 13F portfolio. The second most bullish fund manager is Platinum Asset Management, led by Kerr Neilson, holding a $197.3 million position; the fund has 4.6% of its 13F portfolio invested in the stock. Some other peers that are bullish consist of Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Leon Shaulov's Maplelane Capital and Ken Griffin's Citadel Investment Group.
Since Skyworks Solutions Inc (NASDAQ:SWKS) has witnessed bearish sentiment from the aggregate hedge fund industry, we can see that there was a specific group of funds that decided to sell off their full holdings last quarter. Interestingly, Anand Parekh's Alyeska Investment Group sold off the biggest stake of the 750 funds monitored by Insider Monkey, worth an estimated $109.4 million in call options. Leon Shaulov's fund, Maplelane Capital, also dropped its call options, about $16.5 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 7 funds last quarter.
Let's check out hedge fund activity in other stocks similar to Skyworks Solutions Inc (NASDAQ:SWKS). We will take a look at Brookfield Property REIT Inc. (NASDAQ:BPR), CNH Industrial NV (NYSE:CNHI), Western Midstream Partners, LP (NYSE:WES), and Quest Diagnostics Incorporated (NYSE:DGX). This group of stocks' market valuations are similar to SWKS's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BPR,16,62007,1 CNHI,14,353927,-9 WES,9,159285,1 DGX,24,350395,2 Average,15.75,231404,-1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $231 million. That figure was $734 million in SWKS's case. Quest Diagnostics Incorporated (NYSE:DGX) is the most popular stock in this table. On the other hand Western Midstream Partners, LP (NYSE:WES) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Skyworks Solutions Inc (NASDAQ:SWKS) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on SWKS, though not to the same extent, as the stock returned 3.2% during the third quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.