Did Hedge Funds Drop The Ball On QUALCOMM, Incorporated (QCOM) ?

Hedge funds run by legendary names like George Soros and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant outperformance. That’s why we pay special attention to hedge fund activity in these stocks.

QUALCOMM, Incorporated (NASDAQ:QCOM) was in 45 hedge funds’ portfolios at the end of March. QCOM has experienced a decrease in enthusiasm from smart money of late. There were 51 hedge funds in our database with QCOM positions at the end of the previous quarter. Our calculations also showed that qcom isn’t among the 30 most popular stocks among hedge funds.

In today’s marketplace there are dozens of methods stock traders have at their disposal to assess their holdings. A couple of the most useful methods are hedge fund and insider trading moves. We have shown that, historically, those who follow the best picks of the top investment managers can outclass the S&P 500 by a significant margin (see the details here).

John Overdeck of Two Sigma

Let’s take a look at the key hedge fund action encompassing QUALCOMM, Incorporated (NASDAQ:QCOM).

What have hedge funds been doing with QUALCOMM, Incorporated (NASDAQ:QCOM)?

Heading into the second quarter of 2019, a total of 45 of the hedge funds tracked by Insider Monkey were long this stock, a change of -12% from the fourth quarter of 2018. On the other hand, there were a total of 56 hedge funds with a bullish position in QCOM a year ago. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).

No of Hedge Funds with QCOM Positions

More specifically, D E Shaw was the largest shareholder of QUALCOMM, Incorporated (NASDAQ:QCOM), with a stake worth $667.8 million reported as of the end of March. Trailing D E Shaw was Two Sigma Advisors, which amassed a stake valued at $333.9 million. Citadel Investment Group, Citadel Investment Group, and Partner Fund Management were also very fond of the stock, giving the stock large weights in their portfolios.

Due to the fact that QUALCOMM, Incorporated (NASDAQ:QCOM) has experienced declining sentiment from the entirety of the hedge funds we track, logic holds that there is a sect of hedgies that elected to cut their full holdings in the third quarter. At the top of the heap, Philippe Laffont’s Coatue Management dropped the biggest position of the “upper crust” of funds monitored by Insider Monkey, valued at an estimated $248.9 million in stock. Zach Schreiber’s fund, Point State Capital, also said goodbye to its stock, about $63.4 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 6 funds in the third quarter.

Let’s go over hedge fund activity in other stocks similar to QUALCOMM, Incorporated (NASDAQ:QCOM). We will take a look at BlackRock, Inc. (NYSE:BLK), Intuit Inc. (NASDAQ:INTU), Ambev SA (NYSE:ABEV), and Becton, Dickinson and Company (NYSE:BDX). This group of stocks’ market values are closest to QCOM’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BLK 45 753724 9
INTU 42 2351847 3
ABEV 13 247756 0
BDX 35 784594 -2
Average 33.75 1034480 2.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 33.75 hedge funds with bullish positions and the average amount invested in these stocks was $1034 million. That figure was $1906 million in QCOM’s case. BlackRock, Inc. (NYSE:BLK) is the most popular stock in this table. On the other hand Ambev SA (NYSE:ABEV) is the least popular one with only 13 bullish hedge fund positions. QUALCOMM, Incorporated (NASDAQ:QCOM) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on QCOM as the stock returned 16.8% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.

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