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Hedge Funds Have Never Been This Bullish On Altice USA (ATUS)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Altice USA, Inc. (NYSE:ATUS) based on that data and determine whether they were really smart about the stock.

Altice USA, Inc. (NYSE:ATUS) investors should pay attention to an increase in hedge fund interest recently. Altice USA, Inc. (NYSE:ATUS) was in 57 hedge funds’ portfolios at the end of June. The all time high for this statistics is 55. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 47 hedge funds in our database with ATUS holdings at the end of March. Our calculations also showed that ATUS isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

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 56 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Stuart Zimmer Zimmer Partners

Stuart Zimmer of Zimmer Partners

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock.. We go through lists like the 10 most profitable companies in America to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Now we’re going to go over the recent hedge fund action encompassing Altice USA, Inc. (NYSE:ATUS).

Hedge fund activity in Altice USA, Inc. (NYSE:ATUS)

Heading into the third quarter of 2020, a total of 57 of the hedge funds tracked by Insider Monkey were long this stock, a change of 21% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards ATUS over the last 20 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

More specifically, Soroban Capital Partners was the largest shareholder of Altice USA, Inc. (NYSE:ATUS), with a stake worth $563.5 million reported as of the end of September. Trailing Soroban Capital Partners was Palestra Capital Management, which amassed a stake valued at $240.5 million. Zimmer Partners, Pelham Capital, and Renaissance Technologies 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 Simcoe Capital Management allocated the biggest weight to Altice USA, Inc. (NYSE:ATUS), around 21.72% of its 13F portfolio. Pelham Capital is also relatively very bullish on the stock, dishing out 20.21 percent of its 13F equity portfolio to ATUS.

As one would reasonably expect, some big names were breaking ground themselves. Sachem Head Capital, managed by Scott Ferguson, assembled the most outsized position in Altice USA, Inc. (NYSE:ATUS). Sachem Head Capital had $85.7 million invested in the company at the end of the quarter. Karthik Sarma’s SRS Investment Management also made a $54.9 million investment in the stock during the quarter. The following funds were also among the new ATUS investors: Ike Kier and Ilya Zaides’s KG Funds Management, Beeneet Kothari’s Tekne Capital Management, and Michael Rockefeller and KarláKroeker’s Woodline Partners.

Let’s also examine hedge fund activity in other stocks similar to Altice USA, Inc. (NYSE:ATUS). We will take a look at M&T Bank Corporation (NYSE:MTB), Sun Communities Inc (NYSE:SUI), Magna International Inc. (NYSE:MGA), Leidos Holdings Inc (NYSE:LDOS), Wix.Com Ltd (NASDAQ:WIX), Masco Corporation (NYSE:MAS), and The Liberty SiriusXM Group (NASDAQ:LSXMA). This group of stocks’ market values resemble ATUS’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MTB 30 658440 9
SUI 30 436381 2
MGA 19 467472 -3
LDOS 35 617234 5
WIX 27 1258178 -2
MAS 40 827096 6
LSXMA 46 1294569 -2
Average 32.4 794196 2.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 32.4 hedge funds with bullish positions and the average amount invested in these stocks was $794 million. That figure was $2577 million in ATUS’s case. The Liberty SiriusXM Group (NASDAQ:LSXMA) is the most popular stock in this table. On the other hand Magna International Inc. (NYSE:MGA) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks Altice USA, Inc. (NYSE:ATUS) is more popular among hedge funds. Our overall hedge fund sentiment score for ATUS is 90. 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 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 28.2% in 2020 through August 24th but still managed to beat the market by 20.6 percentage points. Hedge funds were also right about betting on ATUS as the stock returned 18.2% since the end of June and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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