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Hedge Fund Darlings vs. Cirrus Logic, Inc. (CRUS) In 2019

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 more than 57% each. Hedge funds’ top 3 stock picks returned 45.7% last year and beat the S&P 500 ETFs by 14.5 percentage points. That’s a big deal. This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.

Cirrus Logic, Inc. (NASDAQ:CRUS) investors should pay attention to an increase in hedge fund sentiment of late. CRUS was in 24 hedge funds’ portfolios at the end of September. There were 23 hedge funds in our database with CRUS positions at the end of the previous quarter. Our calculations also showed that CRUS 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).

If you’d ask most market participants, hedge funds are assumed to be underperforming, outdated financial tools of the past. While there are more than 8000 funds with their doors open at present, We look at the bigwigs of this group, approximately 750 funds. These investment experts shepherd the majority of the smart money’s total capital, and by monitoring their finest investments, Insider Monkey has discovered several investment strategies that have historically outrun Mr. Market. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

Chuck Royce

Chuck Royce of Royce & Associates

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 key hedge fund action regarding Cirrus Logic, Inc. (NASDAQ:CRUS).

What does smart money think about Cirrus Logic, Inc. (NASDAQ:CRUS)?

At Q3’s end, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 4% from the second quarter of 2019. By comparison, 21 hedge funds held shares or bullish call options in CRUS a year ago. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the number one position in Cirrus Logic, Inc. (NASDAQ:CRUS). AQR Capital Management has a $136.1 million position in the stock, comprising 0.2% of its 13F portfolio. Coming in second is Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $60.1 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish encompass Chuck Royce’s Royce & Associates, David E. Shaw’s D E Shaw and Noam Gottesman’s GLG Partners. In terms of the portfolio weights assigned to each position Sprott Asset Management allocated the biggest weight to Cirrus Logic, Inc. (NASDAQ:CRUS), around 2.19% of its 13F portfolio. Symmetry Peak Management is also relatively very bullish on the stock, designating 0.42 percent of its 13F equity portfolio to CRUS.

As one would reasonably expect, specific money managers were breaking ground themselves. Renaissance Technologies, founded by Jim Simons, created the most outsized position in Cirrus Logic, Inc. (NASDAQ:CRUS). Renaissance Technologies had $9.3 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $8 million position during the quarter. The other funds with new positions in the stock are Joel Greenblatt’s Gotham Asset Management, David Harding’s Winton Capital Management, and David E. Shaw’s D E Shaw.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Cirrus Logic, Inc. (NASDAQ:CRUS) but similarly valued. We will take a look at Liberty Latin America Ltd. (NASDAQ:LILA), Simpson Manufacturing Co, Inc. (NYSE:SSD), Liberty Latin America Ltd. (NASDAQ:LILAK), and Eldorado Resorts Inc (NASDAQ:ERI). All of these stocks’ market caps match CRUS’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LILA 13 154267 2
SSD 13 215110 -4
LILAK 20 375106 -2
ERI 44 1020275 7
Average 22.5 441190 0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.5 hedge funds with bullish positions and the average amount invested in these stocks was $441 million. That figure was $373 million in CRUS’s case. Eldorado Resorts Inc (NASDAQ:ERI) is the most popular stock in this table. On the other hand Liberty Latin America Ltd. (NASDAQ:LILA) is the least popular one with only 13 bullish hedge fund positions. Cirrus Logic, Inc. (NASDAQ:CRUS) 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Hedge funds were also right about betting on CRUS as the stock returned 148.4% in 2019 and outperformed the market. Hedge funds were rewarded for their relative bullishness.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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

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