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Hedge Funds Surfing The Charter Communications, Inc. (CHTR) Wave

We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Charter Communications, Inc. (NASDAQ:CHTR) based on that data.

Is Charter Communications, Inc. (NASDAQ:CHTR) a buy right now? The smart money is becoming more confident. The number of long hedge fund bets rose by 39 in recent months. Our calculations also showed that CHTR found itself a place among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). CHTR was in 104 hedge funds’ portfolios at the end of March. There were 65 hedge funds in our database with CHTR positions at the end of the previous quarter.

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 51 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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Third Point 2014 Q3 Investor Letter

Dan Loeb of Third Point

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to view the new hedge fund action regarding Charter Communications, Inc. (NASDAQ:CHTR).

How are hedge funds trading Charter Communications, Inc. (NASDAQ:CHTR)?

Heading into the second quarter of 2020, a total of 104 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 60% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CHTR over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Berkshire Hathaway was the largest shareholder of Charter Communications, Inc. (NASDAQ:CHTR), with a stake worth $2367.7 million reported as of the end of September. Trailing Berkshire Hathaway was Egerton Capital Limited, which amassed a stake valued at $912.5 million. Citadel Investment Group, AltaRock Partners, and Farallon Capital 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 Hengistbury Investment Partners allocated the biggest weight to Charter Communications, Inc. (NASDAQ:CHTR), around 44% of its 13F portfolio. AltaRock Partners is also relatively very bullish on the stock, setting aside 30.35 percent of its 13F equity portfolio to CHTR.

With a general bullishness amongst the heavyweights, key money managers have jumped into Charter Communications, Inc. (NASDAQ:CHTR) headfirst. BlueSpruce Investments, managed by Tim Hurd and Ed Magnus, established the most valuable position in Charter Communications, Inc. (NASDAQ:CHTR). BlueSpruce Investments had $235.1 million invested in the company at the end of the quarter. Aaron Cowen’s Suvretta Capital Management also made a $161.8 million investment in the stock during the quarter. The following funds were also among the new CHTR investors: John Smith Clark’s Southpoint Capital Advisors, Dan Loeb’s Third Point, and Munir Javeri’s 3G Sahana Capital Management.

Let’s check out hedge fund activity in other stocks similar to Charter Communications, Inc. (NASDAQ:CHTR). We will take a look at International Business Machines Corp. (NYSE:IBM), Union Pacific Corporation (NYSE:UNP), Tesla Inc. (NASDAQ:TSLA), and Danaher Corporation (NYSE:DHR). This group of stocks’ market valuations match CHTR’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IBM 41 902956 -9
UNP 63 3442520 -2
TSLA 61 2124859 10
DHR 63 3193618 2
Average 57 2415988 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 57 hedge funds with bullish positions and the average amount invested in these stocks was $2416 million. That figure was $9915 million in CHTR’s case. Union Pacific Corporation (NYSE:UNP) is the most popular stock in this table. On the other hand International Business Machines Corp. (NYSE:IBM) is the least popular one with only 41 bullish hedge fund positions. Compared to these stocks Charter Communications, Inc. (NASDAQ:CHTR) is more popular among hedge funds. 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 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on CHTR as the stock returned 24.7% so far in Q2 (through the end of May) 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.