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Hedge Funds Are Piling Into This Stock

We at Insider Monkey have gone over 700 13F filings that hedge funds and prominent investors are required to file by the government. The 13F filings show the funds’ and investors’ portfolio positions as of June 30. In this article we look at what those investors think of AT&T Inc. (NYSE:T) and compare it against Intel Corporation (NASDAQ:INTC), The Home Depot, Inc. (NYSE:HD), Mastercard Inc (NYSE:MA), and Pfizer Inc. (NYSE:PFE).

Is AT&T Inc. (NYSE:T) a first-rate stock to buy now? Money managers are betting on the stock. The number of long hedge fund bets advanced by 55 lately. T was in 94 hedge funds’ portfolios at the end of the second quarter of 2018. There were 39 hedge funds in our database with T positions at the end of the previous quarter. This kind of jump in hedge fund sentiment is very rare. AT&T is now the 10th most popular stock among hedge funds at the end of the second quarter (see the list of 25 most popular stocks among hedge funds).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 17.4% year to date and outperformed the market by more than 14 percentage points this year. This strategy also outperformed the market by 3 percentage points in the fourth quarter despite the market volatility (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

FAIRHOLME (FAIRX) Bruce Berkowitz

We’re going to take a look at the key hedge fund action encompassing AT&T Inc. (NYSE:T).

What have hedge funds been doing with AT&T Inc. (NYSE:T)?

Heading into the fourth quarter of 2018, a total of 94 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 141% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards T over the last 6 quarters. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).


More specifically, HBK Investments was the largest shareholder of AT&T Inc. (NYSE:T), with a call option stake worth $571.7 millions reported as of the end of June. Trailing HBK Investments was Pentwater Capital Management, which amassed a stake valued at $483.6 millions. Manikay Partners, Bruce Berkowitz’s Fairholme, and Scoggin were also very fond of the stock, giving the stock large weights in their portfolios.

With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Manikay Partners, managed by Shane Finemore, assembled the biggest position in AT&T Inc. (NYSE:T). Manikay Partners had $80.3 million invested in the company at the end of the quarter. David Costen Haley’s HBK Investments also initiated a $571.7 million call position during the quarter. The other funds with brand new T positions are Nigel Greig and Kenneth Cowin’s Pittencrieff Partners – Gabalex Capital, Michael Price’s MFP Investors, and Miguel Fidalgo’s Triarii Capital.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as AT&T Inc. (NYSE:T) but similarly valued. These stocks are Intel Corporation (NASDAQ:INTC), The Home Depot, Inc. (NYSE:HD), Mastercard Inc (NYSE:MA), and Pfizer Inc. (NYSE:PFE). This group of stocks’ market caps resemble T’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
INTC 62 4570908 11
HD 52 4177989 3
MA 88 9345505 4
PFE 48 3571801 -3

As you can see these stocks had an average of 62.5 hedge funds with bullish positions and the average amount invested in these stocks was $5417 million. That figure was $3043 million in T’s case. Mastercard Inc (NYSE:MA) is the most popular stock in this table. On the other hand Pfizer Inc. (NYSE:PFE) is the least popular one with only 48 bullish hedge fund positions. Compared to these stocks AT&T Inc. (NYSE:T) is more popular among hedge funds. AT&T is also among hedge funds’ top 5 dividend stock picks. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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

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