It’s a little-known fact that stock performance is not evenly distributed (i.e. you don’t have a 50/50 chance of picking a market-beating stock). In fact, despite the S&P 500 gaining about 5.2% between November 1, 2014 and October 30, 2015, less than 49% of the stocks in the index beat the market during that time. In contrast, the 30 stocks from the index which were the most popular among the investors that we track returned 9.5% during that time and 63% of them beat the market. This shows that while hedge funds get a lot of flak from the mainstream media for their performance, it can be rewarding to follow their moves using the right sets of data. Even then, there is never a fool proof strategy to generating returns, as even the collective wisdom of top hedge funds gets it wrong some times, as in the case of some of their top picks from the index like Micron and Anadarko. The data though, shows that following the collective wisdom of select hedge funds can be a very wise move overall.
Is T MOBILE US INC (NYSE:TMUS) a buy here? The smart money is in a pessimistic mood. The number of long hedge fund positions dropped by 15 recently. At the end of this article we will also compare TMUS to other stocks including Ecolab Inc. (NYSE:ECL), Ericsson (ADR) (NASDAQ:ERIC), and HCA Holdings Inc (NYSE:HCA) to get a better sense of its popularity.
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In the financial world there are a large number of metrics stock traders use to grade stocks. A duo of the most useful metrics are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the top investment managers can beat the broader indices by a very impressive margin (see the details here).
With all of this in mind, let’s take a look at the new action regarding T MOBILE US INC (NYSE:TMUS).
What have hedge funds been doing with T MOBILE US INC (NYSE:TMUS)?
At Q3’s end, a total of 54 of the hedge funds tracked by Insider Monkey were bullish on this stock, a 22% drop from the second quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their holdings meaningfully (or had already accumulated large positions).
Of the funds tracked by Insider Monkey, Paulson & Co, managed by John Paulson, holds the number one position in T MOBILE US INC (NYSE:TMUS). Paulson & Co has a $937.4 million position in the stock, comprising 4.9% of its 13F portfolio. On Paulson & Co’s heels is Third Point, led by Dan Loeb, holding a $258.8 million position; the fund has 2.4% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish contain Rob Citrone’s Discovery Capital Management, Michael Messner’s Seminole Capital (Investment Mgmt), and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Seeing as T MOBILE US INC (NYSE:TMUS) has faced declining sentiment from hedge fund managers, it’s safe to say that there were a few funds who sold off their positions entirely by the end of the third quarter. Interestingly, Philippe Laffont’s Coatue Management dumped the largest stake of the “upper crust” of funds monitored by Insider Monkey, worth close to $165.2 million in stock. James Dinan’s fund, York Capital Management, also dumped its stock, about $122.6 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 15 funds by the end of the third quarter.
Let’s check out hedge fund activity in other stocks similar to T MOBILE US INC (NYSE:TMUS). These stocks are Ecolab Inc. (NYSE:ECL), Ericsson (ADR) (NASDAQ:ERIC), HCA Holdings Inc (NYSE:HCA), and Enbridge Inc (USA) (NYSE:ENB). This group of stocks’ market values resemble TMUS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ECL | 26 | 2136599 | 3 |
| ERIC | 11 | 48510 | -1 |
| HCA | 71 | 3751963 | -12 |
| ENB | 18 | 339619 | -2 |
As you can see these stocks had an average of 31.5 hedge funds with bullish positions and the average amount invested in these stocks was $1.57 billion. That figure was $3.20 billion in TMUS’s case. HCA Holdings Inc (NYSE:HCA) is the most popular stock in this table. On the other hand Ericsson (ADR) (NASDAQ:ERIC) is the least popular one with only 11 bullish hedge fund positions. T MOBILE US INC (NYSE:TMUS) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are investing heavily in. In this regard HCA might be a better candidate to consider for a long position.
