Is AT&T Inc. (T) Going to Burn These Hedge Funds?

Page 1 of 2

AT&T Inc. (NYSE:T) was in 35 hedge funds’ portfolio at the end of the first quarter of 2013. T investors should pay attention to a decrease in hedge fund sentiment recently. There were 35 hedge funds in our database with T holdings at the end of the previous quarter.

In today’s marketplace, there are many gauges shareholders can use to analyze the equity markets. A duo of the most underrated are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the top investment managers can outperform the broader indices by a healthy amount (see just how much).

Equally as beneficial, optimistic insider trading sentiment is another way to break down the investments you’re interested in. There are a number of motivations for an insider to drop shares of his or her company, but only one, very simple reason why they would buy. Several empirical studies have demonstrated the valuable potential of this strategy if you understand where to look (learn more here).

Now, it’s important to take a look at the recent action surrounding AT&T Inc. (NYSE:T).

How are hedge funds trading AT&T Inc. (NYSE:T)?

At the end of the first quarter, a total of 35 of the hedge funds we track were bullish in this stock, a change of 0% from the first quarter. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were upping their stakes significantly.

AT&T Inc. (NYSE:T)Of the funds we track, Fisher Asset Management, managed by Ken Fisher, holds the biggest position in AT&T Inc. (NYSE:T). Fisher Asset Management has a $258.1 million position in the stock, comprising 0.7% of its 13F portfolio. Sitting at the No. 2 spot is Adage Capital Management, managed by Phill Gross and Robert Atchinson, which held a $250.9 million position; the fund has 0.8% of its 13F portfolio invested in the stock. Some other hedgies with similar optimism include Cliff Asness’s AQR Capital Management, D. E. Shaw’s D E Shaw and Daniel S. Och’s OZ Management.

Judging by the fact that AT&T Inc. (NYSE:T) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there was a specific group of money managers that elected to cut their entire stakes heading into Q2. It’s worth mentioning that Donald Chiboucis’s Columbus Circle Investors cut the biggest stake of the “upper crust” of funds we track, valued at close to $139 million in stock., and Eric Mindich of Eton Park Capital was right behind this move, as the fund said goodbye to about $14.7 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

How are insiders trading AT&T Inc. (NYSE:T)?

Insider purchases made by high-level executives is at its handiest when the primary stock in question has seen transactions within the past six months. Over the last 180-day time frame, AT&T Inc. (NYSE:T) has experienced zero unique insiders buying, and 4 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to AT&T Inc. (NYSE:T). These stocks are Windstream Corporation (NASDAQ:WIN), CenturyLink, Inc. (NYSE:CTL), Chunghwa Telecom Co., Ltd (ADR) (NYSE:CHT), BCE Inc. (USA) (NYSE:BCE), and Verizon Communications Inc. (NYSE:VZ). All of these stocks are in the telecom services – domestic industry and their market caps are similar to T’s market cap.

Page 1 of 2