Among Verizon, AT&T Inc. (NYSE:T), and Sprint, AT&T is the second most-popular stock among the investors in our database. We track over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify the popularity of thousands of stocks in terms of the number of funds holding shares. This data allows us to develop investment strategies that generally produce market-beating returns. Our latest strategy managed to outperform the broader indices over the past 12 months. The strategy identifies the 100 best-performing funds of the previous quarter, which we accomplish by using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 39.7% gains over the past 12 months and outperformed the 24.1% gain enjoyed by the S&P 500 ETFs. Our enhanced small-cap hedge fund strategy returned more than 45% over the last 12 months and outperformed SPY by more than 30 percentage points over the last 4.5 years (see more details).
In AT&T Inc. (NYSE:T), 48 funds held shares heading into 2017, down from 51 funds a quarter earlier. However, the total value of their holdings advanced to $2.79 billion from $2.55 billion. Among these funds, Phill Gross and Robert Atchinson’s Adage Capital Management and Cliff Asness’ AQR Capital Management increased their stakes in the company by 2% and 8% over the quarter, respectively. At the end of 2016, Adage held 8.79 million shares, while AQR disclosed ownership of 8.59 million shares in its latest 13F filing. In addition, D E Shaw, founded by David E. Shaw, almost doubled its AT&T stake during the fourth quarter to 4.09 million shares (the fund also owns ‘Call’ and ‘Put’ options underlying AT&T stock).
Moreover, since there was a decline in the number of funds holding shares of AT&T Inc. (NYSE:T), logic holds that some funds decided to close their positions during the final three months of 2016. Among them, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital closed one of the largest positions, which had contained 6.40 million shares at the end of the third quarter.
So while we cannot say with certainty that smart money approves of AT&T Inc. (NYSE:T)’s decision to acquire Time Warner, we can see that they don’t oppose it either, otherwise, history suggests there would’ve been a significant outflow of capital. At the same time, since the number of investors long Time Warner Inc (NYSE:TWX) surged to 94 from 56 during the fourth quarter, it’s easy to assume that hedge funds believe that there’s a high probability that the deal will go through.
Disclosure: None
