The third quarter was a rough one for most investors, as fears of an interest rate hike in the U.S, a weakening economy in China, and a stagnant Europe, weighed heavily on the minds of investors. Both the S&P 500 and Russell 2000 sank as a result, with the Russell 2000, which is composed of smaller companies, being hit especially hard. This was primarily due to hedge funds, which are big supporters of small-cap stocks, pulling some of their capital out of the volatile markets during this time. Let’s look at how this market volatility affected the sentiment of hedge funds towards QUALCOMM, Inc. (NASDAQ:QCOM), and what that likely means for the prospects of the company and its stock.
Is QUALCOMM, Inc. (NASDAQ:QCOM) a safe investment now? Money managers are in a slightly bearish mood. The number of long hedge fund bets fell by 1 recently. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Starbucks Corporation (NASDAQ:SBUX), Vodafone Group Plc (ADR) (NASDAQ:VOD), and GlaxoSmithKline plc (ADR) (NYSE:GSK) to gather more data points.
To most market participants, hedge funds are viewed as underperforming, old financial vehicles of yesteryear. While there are over 8,000 funds trading at present, our experts choose to focus on the bigwigs of this group, around 700 funds. These money managers administer most of the hedge fund industry’s total asset base, and by observing their inimitable picks, Insider Monkey has figured out several investment strategies that have historically defeated the broader indices. Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
Now, we’re going to take a look at the new action encompassing QUALCOMM, Inc. (NASDAQ:QCOM).
How are hedge funds trading QUALCOMM, Inc. (NASDAQ:QCOM)?
At the end of the third quarter, a total of 68 of the hedge funds tracked by Insider Monkey were bullish on this stock, a slight 1% dip from the previous quarter. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their stakes substantially (or had already accumulated large positions).
According to Insider Monkey’s hedge fund database, Barry Rosenstein’s JANA Partners has the largest position in QUALCOMM, Inc. (NASDAQ:QCOM), worth close to $1.53 billion, accounting for 17.3% of its total 13F portfolio. Coming in second is Orbis Investment Management, managed by William B. Gray, which holds a $770.5 million position; 6.6% of its 13F portfolio is allocated to the company. Some other professional money managers with similar optimism encompass David Blood and Al Gore’s Generation Investment Management, John H. Scully’s SPO Advisory Corp, and Ken Fisher’s Fisher Asset Management.
Seeing as QUALCOMM, Inc. (NASDAQ:QCOM) has experienced declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there is a sect of funds that slashed their positions entirely in the third quarter. It’s worth mentioning that Matthew Mark’s Jet Capital Investors cut the largest stake of the 700 funds watched by Insider Monkey, valued at about $184.8 million in stock. Benjamin A. Smith’s fund, Laurion Capital Management, also dropped its stock, about $137.8 million worth. These transactions are important to note, as total hedge fund interest fell by 1 fund in the third quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as QUALCOMM, Inc. (NASDAQ:QCOM) but similarly valued. We will take a look at Starbucks Corporation (NASDAQ:SBUX), Vodafone Group Plc (ADR) (NASDAQ:VOD), GlaxoSmithKline plc (ADR) (NYSE:GSK), and NIKE, Inc. (NYSE:NKE). This group of stocks’ market values match QCOM’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 43.75 hedge funds with bullish positions and the average amount invested in these stocks was $1.99 billion. That figure was $6.15 billion in QCOM’s case. NIKE, Inc. (NYSE:NKE) is the most popular stock in this table. On the other hand Vodafone Group Plc (ADR) (NASDAQ:VOD) is the least popular one with only 27 bullish hedge fund positions. Compared to these stocks QUALCOMM, Inc. (NASDAQ:QCOM) is more popular among hedge funds and has far more capital invested in it. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.