The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge funds have been producing disappointing net returns in recent years, however that was partly due to the poor performance of small-cap stocks in general. Well, small-cap stocks finally turned the corner and have been beating the large-cap stocks by more than 10 percentage points over the last 5 months.This means the relevancy of hedge funds’ public filings became inarguable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards ON Semiconductor Corp (NASDAQ:ON).
ON Semiconductor Corp (NASDAQ:ON) was in 21 hedge funds’ portfolios at the end of the third quarter of 2016. ON has experienced a decrease in enthusiasm from smart money in recent months. There were 33 hedge funds in our database with ON holdings 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 Equity Commonwealth (NYSE:EQC), Chicago Bridge & Iron Company N.V. (NYSE:CBI), and Tableau Software Inc (NYSE:DATA) 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.
Hedge fund activity in ON Semiconductor Corp (NASDAQ:ON)
Heading into the fourth quarter of 2016, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 36% drop from the second quarter of 2016, pushing hedge fund ownership to a yearly low. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Pzena Investment Management, managed by Richard S. Pzena, holds the most valuable position in ON Semiconductor Corp (NASDAQ:ON). Pzena Investment Management has a $153.8 million position in the stock. The second most bullish fund manager is Citadel Investment Group, led by Ken Griffin, holding a $94.3 million position. Some other members of the smart money with similar optimism encompass D E Shaw, Cliff Asness’ AQR Capital Management and Leon Shaulov’s Maplelane Capital.
Since ON Semiconductor Corp (NASDAQ:ON) has witnessed bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there exists a select few money managers that decided to sell off their entire stakes by the end of the third quarter. Interestingly, Josh Resnick’s Jericho Capital Asset Management dumped the largest investment of all the hedgies followed by Insider Monkey, comprising about $30.7 million in stock. Glenn Russell Dubin’s fund, Highbridge Capital Management, also sold off its stock, about $10.9 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 12 funds by the end of the third quarter.
Let’s go over hedge fund activity in other stocks similar to ON Semiconductor Corp (NASDAQ:ON). We will take a look at Equity Commonwealth (NYSE:EQC), Chicago Bridge & Iron Company N.V. (NYSE:CBI), Tableau Software Inc (NYSE:DATA), and Synovus Financial Corp. (NYSE:SNV). This group of stocks’ market values resemble ON’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 25.5 hedge funds with bullish positions and the average amount invested in these stocks was $517 million. That figure was $494 million in ON’s case. Tableau Software Inc (NYSE:DATA) is the most popular stock in this table. On the other hand Synovus Financial Corp. (NYSE:SNV) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks ON Semiconductor Corp (NASDAQ:ON) is only as popular as SNV. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.