Was The Smart Money Right About Piling Into Qorvo Inc (QRVO)?

In this article we will take a look at whether hedge funds think Qorvo Inc (NASDAQ:QRVO) 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.

Hedge fund interest in Qorvo Inc (NASDAQ:QRVO) shares was flat at the end of last quarter but stood at its all time high. Our calculations also showed that QRVO isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). At the end of this article we will also compare QRVO to other stocks including TransUnion (NYSE:TRU), CDW Corporation (NASDAQ:CDW), and ZoomInfo Technologies Inc. (NASDAQ:ZI) to get a better sense of its popularity.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.


Seth Klarman of Baupost Group

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

At the end of the fourth quarter, a total of 51 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the third quarter of 2020. On the other hand, there were a total of 45 hedge funds with a bullish position in QRVO a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Baupost Group held the most valuable stake in Qorvo Inc (NASDAQ:QRVO), which was worth $738.3 million at the end of the fourth quarter. On the second spot was AQR Capital Management which amassed $169.3 million worth of shares. Iridian Asset Management, Fisher Asset Management, and Select Equity Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Panview Capital allocated the biggest weight to Qorvo Inc (NASDAQ:QRVO), around 7.73% of its 13F portfolio. Baupost Group is also relatively very bullish on the stock, setting aside 6.81 percent of its 13F equity portfolio to QRVO.

Since Qorvo Inc (NASDAQ:QRVO) has experienced declining sentiment from the smart money, it’s easy to see that there were a few money managers who were dropping their full holdings heading into Q1. It’s worth mentioning that John Hurley’s Cavalry Asset Management dropped the largest stake of all the hedgies tracked by Insider Monkey, comprising an estimated $29.7 million in stock. Michael Burry’s fund, Scion Asset Management, also sold off its stock, about $7.7 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks similar to Qorvo Inc (NASDAQ:QRVO). These stocks are TransUnion (NYSE:TRU), CDW Corporation (NASDAQ:CDW), ZoomInfo Technologies Inc. (NASDAQ:ZI), Wheaton Precious Metals Corp. (NYSE:WPM), Expedia Group Inc (NASDAQ:EXPE), Pioneer Natural Resources Company (NYSE:PXD), and Hologic, Inc. (NASDAQ:HOLX). All of these stocks’ market caps are closest to QRVO’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TRU 41 2025227 -6
CDW 43 1622545 13
ZI 31 327082 9
WPM 34 755047 5
EXPE 76 6594558 12
PXD 40 685798 -2
HOLX 43 715967 -7
Average 44 1818032 3.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 44 hedge funds with bullish positions and the average amount invested in these stocks was $1818 million. That figure was $2122 million in QRVO’s case. Expedia Group Inc (NASDAQ:EXPE) is the most popular stock in this table. On the other hand ZoomInfo Technologies Inc. (NASDAQ:ZI) is the least popular one with only 31 bullish hedge fund positions. Qorvo Inc (NASDAQ:QRVO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for QRVO is 57.2. 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 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on QRVO, though not to the same extent, as the stock returned 13.2% since Q4 (through April 30th) and outperformed the market as well.

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