Is ON Semiconductor (ON) Stock A Buy or Sell?

In this article we will take a look at whether hedge funds think ON Semiconductor Corporation (NASDAQ:ON) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Is ON stock a buy or sell? ON Semiconductor Corporation (NASDAQ:ON) has experienced an increase in activity from the world’s largest hedge funds recently. ON Semiconductor Corporation (NASDAQ:ON) was in 45 hedge funds’ portfolios at the end of December. The all time high for this statistic is 39. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that ON isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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Jeff Smith

Jeffrey Smith of Starboard Value LP

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Do Hedge Funds Think ON Is A Good Stock To Buy Now?

At fourth quarter’s end, a total of 45 of the hedge funds tracked by Insider Monkey were long this stock, a change of 55% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ON over the last 22 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in ON Semiconductor Corporation (NASDAQ:ON) was held by Starboard Value LP, which reported holding $295.8 million worth of stock at the end of December. It was followed by Citadel Investment Group with a $240.8 million position. Other investors bullish on the company included Jericho Capital Asset Management, Paradice Investment Management, and Newbrook Capital Advisors. In terms of the portfolio weights assigned to each position Starboard Value LP allocated the biggest weight to ON Semiconductor Corporation (NASDAQ:ON), around 7.52% of its 13F portfolio. Litespeed Management is also relatively very bullish on the stock, designating 5.97 percent of its 13F equity portfolio to ON.

As one would reasonably expect, key money managers have been driving this bullishness. Starboard Value LP, managed by Jeffrey Smith, initiated the biggest position in ON Semiconductor Corporation (NASDAQ:ON). Starboard Value LP had $295.8 million invested in the company at the end of the quarter. Josh Resnick’s Jericho Capital Asset Management also initiated a $190.1 million position during the quarter. The following funds were also among the new ON investors: Robert Boucai’s Newbrook Capital Advisors, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Benjamin Pass’s TOMS Capital.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as ON Semiconductor Corporation (NASDAQ:ON) but similarly valued. We will take a look at Sarepta Therapeutics Inc (NASDAQ:SRPT), Cable One Inc (NYSE:CABO), Penn National Gaming, Inc (NASDAQ:PENN), Omnicom Group Inc. (NYSE:OMC), Ally Financial Inc (NYSE:ALLY),, Inc. (NYSE:AI), and WPP Plc (NYSE:WPP). This group of stocks’ market valuations are closest to ON’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SRPT 37 978493 2
CABO 17 827605 -6
PENN 41 1324598 -4
OMC 34 546941 0
ALLY 57 2593837 4
AI 37 483532 37
WPP 6 37552 -1
Average 32.7 970365 4.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 32.7 hedge funds with bullish positions and the average amount invested in these stocks was $970 million. That figure was $1377 million in ON’s case. Ally Financial Inc (NYSE:ALLY) is the most popular stock in this table. On the other hand WPP Plc (NYSE:WPP) is the least popular one with only 6 bullish hedge fund positions. ON Semiconductor Corporation (NASDAQ:ON) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ON is 78.2. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and still beat the market by 0.8 percentage points. Hedge funds were also right about betting on ON as the stock returned 22.5% since the end of Q4 (through 3/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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