The smart money has submitted their 13F filings for the reporting period of June 30, and we at Insider Monkey have collected and processed the reams of data to share valuable information with existing and aspiring investors. Our articles relating to hedge funds’ trends during the second quarter have covered a host of topics, including the stocks in which funds poured money into, their top healthcare picks, and their favorite high dividend stock picks, among several others. In this article, we focus on the five large-cap public utilities stocks which emerged as the most popular among the best money managers in the world at the end of the quarter. Would you like to know what these stocks are? If yes, then read on.
But why do we track hedge fund activity? From one point of view we can argue that hedge funds are consistently underperforming when it comes to net returns over the last three years, when compared to the S&P 500. But that doesn’t mean that we should completely neglect the hedge funds’ activities. There are various reasons behind the low hedge fund returns. Our research indicated that hedge funds’ long positions actually beat the market. In our back-tests covering the 1999-2012 period hedge funds’ top small cap stocks edged the S&P 500 index by double digits annually. The 15 most popular small cap stock picks among hedge funds also bested passive index funds by around 60 percentage points over the 35 month period beginning from September 2012, returning 118% (read the details here).
5. AT&T Inc. (NYSE:T)
Investors with Long Positions (as of June 30): 49
Aggregate Value of Investors’ Holdings (as of June 30): $1.60 Billion
During the second quarter of 2015, the number of hedge fund investors in AT&T Inc. (NYSE:T) increased from 43, although their aggregate investment value declined by 14.64%. Just a few months ago, the American multinational telecommunications company acquired two Mexico-based mobile phone companies for $4.4 billion and is currently on the path of rebranding them, according to company officials. The move to acquire the two companies was inspired by amendments in Mexican laws and regulations that made the environment more competitive for other companies, shaking America Movil SAB de CV (ADR) (NYSE:AMX)’s long-term dominance of the Mexican market. Year-to-date, AT&T Inc. (NYSE:T)’s share price has dipped by 4.35%. At the end of the second quarter, Adage Capital Management, headed by Phill Gross and Robert Atchinson, was long in the stock with 7.44 million shares valued at $264.35 million, having raised its stake by 31%. Cliff Asness‘ AQR Capital Management on the other hand, closed the second quarter with 2.06 million shares worth $73.02 million.
4. Verizon Communications Inc. (NYSE:VZ)
Investors with Long Positions (as of June 30): 62
Aggregate Value of Investors’ Holdings (as of June 30): $2.78 Billion
At the beginning of the second quarter, there were 59 hedge funds out of the ones tracked by Insider Monkey with positions in Verizon Communications Inc. (NYSE:VZ), with an aggregate of $2.21 billion in investment value. Funds like Jim Simons’ Renaissance Technologies and billionaire Ken Griffin’s Citadel Investment Group opened notable new positions in the stock during the quarter. The broadband and telecommunications company, which is the largest wireless communications service provider, ranked high in state-level tests that included speed, reliability, and data. For most investors looking for stability, Verizon Communications Inc. (NYSE:VZ) has been a prime target, having a stable dividend yield since 1984. At the end of the second quarter, famed billionaire investor Warren Buffett‘s Berkshire Hathaway was the biggest investor from among the firms tracked by Insider Monkey. The holding company was long in the stock with 15.00 million shares with a market value of $699.19 million.
3. Kinder Morgan Inc (NYSE:KMI)
Investors with Long Positions (as of June 30): 64
Aggregate Value of Investors’ Holdings (as of June 30): $2.44 Billion
The second quarter of 2015 saw the number of hedge funds invested in Kinder Morgan Inc (NYSE:KMI) out of the ones we track, drop from 66, while hedge funds’ aggregate investment rose by 53.83%. The company, which ranks as the third-largest oil corporation in America, has been affected by the economic hurdles facing China. The devaluation of the yuan has affected oil prices and is likely to trim the demand for oil in China; bad news for the company given that the country is the second-largest consumer of oil. Kinder Morgan Inc (NYSE:KMI) is currently planning to expand its Trans Mountain pipeline, but the progress has been halted temporarily, awaiting a hearing by the National Energy Board. At the end of the second quarter, FPR Partners, headed by Bob Peck and Andy Raab, held a long position of 4.91 million shares with a market value of $188.39 million.
2. T-Mobile US Inc (NYSE:TMUS)
Investors with Long Positions (as of June 30): 69
Aggregate Value of Investors’ Holdings (as of June 30): $3.46 Billion
The number of hedge funds tracked by Insider Monkey that were invested in T-Mobile US Inc (NYSE:TMUS) rose from 50 at the beginning of the quarter, while their aggregate investments also registered an upward shift of 33.77%. The company recently released the second-generation Tile, which is a Bluetooth tracker for smartphones. The Bluetooth technology locator can be pegged on anything for easy tracking. In a bid to boost sales, the wireless carrier announced that it will provide free Netflix subscriptions to customers who pre-register for the Galaxy S6 Edge+ and Note 5. At the end of the second quarter of 2015, Paulson & Co, led by John Paulson, emerged as the biggest shareholder of T-Mobile US Inc (NYSE:TMUS) out of the funds tracked by Insider Monkey. The fund had a long position of 23.84 million shares valued at $924.47 million. Dan Loeb initiated a position in the stock during the quarter to close the period with 6.50 million shares with a market value of $252.01 million.
1. Williams Companies Inc (NYSE:WMB)
Investors with Long Positions (as of June 30): 86
Aggregate Value of Investors’ Holdings (as of June 30): $10.64 Billion
To wrap it all up, let’s look at Williams Companies Inc (NYSE:WMB), in which just 60 hedge funds were invested at the beginning of the second quarter. Hedge funds’ ownership in the stock went upward by 60.68% during the quarter alongside the big gain in the number of positions. There have been rumors of possible attempts to acquire the natural gas and transportation company by Spectra Energy Corp (NYSE:SE) and Kinder Morgan Inc. Just recently, Williams Companies Inc (NYSE:WMB) rejected a bid by Energy Transfer Equity Lp (NYSE:ETE) to acquire it, but the possibility of an acquisition or merger remains. At the close of the second quarter, Corvex Capital, headed by activist Keith Meister, emerged as the biggest shareholder of the company out of the funds tracked by Insider Monkey, owning 41.68 million shares worth $2.39 billion.
Disclosure: None
