U.S stocks started 2016 with a painful correction, with the S&P 500 having fallen by more than 11% during the first six weeks of the year. Telecom stocks were among the first to halt the fall and recover from the sell-off, so it is no wonder that hedge funds awarded them more attention during the first quarter. Overall, the Dow Jones U.S. Telecommunications Index is currently up by roughly 14% in 2016, outpacing the S&P 500 by ten percentage points. In this article we’ll take a look at five telecom stocks hedge funds like the most and see how they were being traded in the first quarter.
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Not Much Love For SBA Communications
Among the telecom giants, SBA Communications Corporation (NASDAQ:SBAC) was the only stock that fell out of grace with some of the collective of top hedge funds that Insider Monkey tracks. The number of shareholders of the stock among those investment firms fell to 42 from 50 during the first quarter, though their combined holdings represented more than 16% of the company’s common stock. Farallon Capital, managed by Thomas Steyer, holds a significant position in SBA Communications Corporation (NASDAQ:SBAC), having increased it by 87% during the quarter to 2.97 million shares worth $297 million at the end of March. The company reported mixed first quarter results that put a dent in its stock recovery; SBA Communications Corporation (NASDAQ:SBAC) posted a profit of $53.6 million or $0.07 per share on an adjusted basis, while analysts were looking for $0.08 per share. Revenue came in at $399.8 million, slightly higher than analysts’ consensus estimate of $398.2 million. Analysts at Deutsche Bank recently reiterated their ‘Hold’ rating for the stock and reduced their price target on it to $102 per share, from $106 per share.
Good Time to Buy AT&T?
One of the largest U.S telecom companies, AT&T Inc. (NYSE:T) was held by 51 top hedge funds at the end of March, up from 48 registered three months earlier. Their ownership, however, amounts to just 1.3% of the company’s outstanding stock. AT&T Inc. (NYSE:T) is one of the telecom stocks that Arrowstreet Capital added to its equity portfolio during the first quarter, as the fund acquired more than 22.4 million shares of the company, worth $880 million during the period. Cliff Asness also hiked his fund’s stake in AT&T during the first three months of the year, with AQR Capital Management holding 5.91 million shares worth $231 million at the end of March, up by 139%. So far this year, AT&T Inc. (NYSE:T) has been on a solid uptrend, gaining 18% year-to-date. Even after this surge, the stock is still cheaper compared to its peers: its current P/E multiple of 17.00 is significantly lower than the industry average of 25.00. Shareholders receive annual dividend payments of $1.90 per share, which amounts to a yield of 4.70%.
On the next page we’ll discuss three other telecom giants that top hedge funds are bullish on.