Hedge Funds Have Never Been This Bullish On QUALCOMM, Incorporated (QCOM)

In this article we will check out the progression of hedge fund sentiment towards QUALCOMM, Incorporated (NASDAQ:QCOM) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Is QUALCOMM, Incorporated (NASDAQ:QCOM) a buy, sell, or hold? Investors who are in the know were becoming hopeful. The number of long hedge fund bets inched up by 13 lately. QUALCOMM, Incorporated (NASDAQ:QCOM) was in 87 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 74. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that QCOM ranked 30th among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.


Louis Bacon Moore of Moore Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets. Tesla’s stock price skyrocketed, yet lithium prices are still below their 2019 highs. So, we are checking out this lithium stock right now. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website. Keeping this in mind we’re going to take a gander at the fresh hedge fund action regarding QUALCOMM, Incorporated (NASDAQ:QCOM).

Hedge fund activity in QUALCOMM, Incorporated (NASDAQ:QCOM)

At the end of the third quarter, a total of 87 of the hedge funds tracked by Insider Monkey were long this stock, a change of 18% from one quarter earlier. By comparison, 60 hedge funds held shares or bullish call options in QCOM a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, David Goel and Paul Ferri’s Matrix Capital Management has the biggest position in QUALCOMM, Incorporated (NASDAQ:QCOM), worth close to $392.7 million, accounting for 5.2% of its total 13F portfolio. On Matrix Capital Management’s heels is Ken Griffin of Citadel Investment Group, with a $288 million call position; 0.1% of its 13F portfolio is allocated to the stock. Some other peers that hold long positions contain John Overdeck and David Siegel’s Two Sigma Advisors, D. E. Shaw’s D E Shaw and Brian Ashford-Russell and Tim Woolley’s Polar Capital. In terms of the portfolio weights assigned to each position Valueworks LLC allocated the biggest weight to QUALCOMM, Incorporated (NASDAQ:QCOM), around 8.38% of its 13F portfolio. Bronson Point Partners is also relatively very bullish on the stock, dishing out 6.84 percent of its 13F equity portfolio to QCOM.

As one would reasonably expect, key hedge funds have been driving this bullishness. Senator Investment Group, managed by Doug Silverman and Alexander Klabin, initiated the most outsized position in QUALCOMM, Incorporated (NASDAQ:QCOM). Senator Investment Group had $82.4 million invested in the company at the end of the quarter. Chris Rokos’s Rokos Capital Management also initiated a $63.5 million position during the quarter. The following funds were also among the new QCOM investors: Bijan Modanlou, Joseph Bou-Saba, and Jayaveera Kodali’s Alta Park Capital, Brad Farber’s Atika Capital, and Louis Bacon’s Moore Global Investments.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as QUALCOMM, Incorporated (NASDAQ:QCOM) but similarly valued. These stocks are China Mobile Limited (NYSE:CHL), Texas Instruments Incorporated (NASDAQ:TXN), BHP Group (NYSE:BHP), Charter Communications, Inc. (NASDAQ:CHTR), Sanofi (NASDAQ:SNY), Lowe’s Companies, Inc. (NYSE:LOW), and Linde plc (NYSE:LIN). All of these stocks’ market caps are similar to QCOM’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CHL 10 400662 1
TXN 55 2079422 0
BHP 18 710662 2
CHTR 88 11998879 -8
SNY 20 1244537 -4
LOW 83 6564097 -6
LIN 60 3554875 8
Average 47.7 3793305 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 47.7 hedge funds with bullish positions and the average amount invested in these stocks was $3793 million. That figure was $2581 million in QCOM’s case. Charter Communications, Inc. (NASDAQ:CHTR) is the most popular stock in this table. On the other hand China Mobile Limited (NYSE:CHL) is the least popular one with only 10 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 overall hedge fund sentiment score for QCOM is 89.4. 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. 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 percentage points. These stocks gained 28.1% in 2020 through November 23rd and still beat the market by 15.4 percentage points. Hedge funds were also right about piling into QCOM as the stock returned 22.2% since the end of Q3 (through 11/23) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Follow Qualcomm Inc (NASDAQ:QCOM)

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