More and More Hedge Funds Are Buying QUALCOMM, Inc. (QCOM)

The Russell 2000 ETF (IWM) has shot up by 38% since hitting a 52-week low on February 11, easily outdistancing the S&P 500 ETF (SPY)’s 19% gains during that time. Nor is the small-cap rally likely to be over. History shows that after periods of 15% or greater declines in the Russell 2000 ETF, it has responded with average gains of nearly 100%. In fact, only once did the rebound run come in below 60% gains. It’s no wonder then that hedge funds appear to be aggressively putting their money back into small-cap stocks. In this article, we’ll look at their Q3 trading habits in regards to QUALCOMM, Inc. (NASDAQ:QCOM).

QUALCOMM, Inc. (NASDAQ:QCOM) was in 69 hedge funds’ portfolios at the end of September. QCOM investors should be aware of an increase in enthusiasm from smart money recently. There were 48 hedge funds in our database with QCOM positions at the end of the previous quarter. 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 Diageo plc (ADR) (NYSE:DEO), Reynolds American, Inc. (NYSE:RAI), and Celgene Corporation (NASDAQ:CELG) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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

Heading into the fourth quarter of 2016, a total of 69 of the hedge funds tracked by Insider Monkey were long this stock, a 44% jump from the previous quarter, boosting hedge fund ownership to near its Q4 2015 level. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, William B. Gray’s Orbis Investment Management has the number one position in QUALCOMM, Inc. (NASDAQ:QCOM), worth close to $1.1102 billion, accounting for 7.8% of its total 13F portfolio. The second largest stake is held by Ken Fisher of Fisher Asset Management, with a $663.9 million position. Remaining peers that are bullish encompass David Blood and Al Gore’s Generation Investment Management, Cliff Asness’ AQR Capital Management, and John H. Scully’s SPO Advisory Corp.

As aggregate interest increased, key hedge funds were leading the bulls’ herd. Jericho Capital Asset Management, managed by Josh Resnick, assembled the most outsized position in QUALCOMM, Inc. (NASDAQ:QCOM). Jericho Capital Asset Management had $107.2 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $104.4 million investment in the stock during the quarter. The following funds were also among the new QCOM investors: David Tepper’s Appaloosa Management LP, Zach Schreiber’s Point State Capital, and Steve Cohen’s Point72 Asset Management.

Let’s also examine 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 Diageo plc (ADR) (NYSE:DEO), Reynolds American, Inc. (NYSE:RAI), Celgene Corporation (NASDAQ:CELG), and AstraZeneca plc (ADR) (NYSE:AZN). This group of stocks’ market caps match QCOM’s market cap.

As you can see these stocks had an average of 37.25 hedge funds with bullish positions and the average amount invested in these stocks was $1.35 billion. That figure was $4.64 billion in QCOM’s case. Celgene Corporation (NASDAQ:CELG) is the most popular stock in this table. On the other hand Diageo plc (ADR) (NYSE:DEO) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks QUALCOMM, Inc. (NASDAQ:QCOM) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers and hedge fund sentiment exploded last quarter, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

Disclosure: None