We at Insider Monkey have gone over 817 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 September 30th. In this article, we look at what those funds think of AT&T Inc. (NYSE:T) based on that data.
Is AT&T (T) a good stock to buy now? The best stock pickers were selling. The number of bullish hedge fund bets dropped by 6 in recent months. AT&T Inc. (NYSE:T) was in 51 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 94. Our calculations also showed that T isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.
In the 21st century investor’s toolkit there are plenty of gauges stock market investors use to evaluate stocks. Two of the most under-the-radar gauges are hedge fund and insider trading moves. We have shown that, historically, those who follow the best picks of the top investment managers can outclass the market by a solid margin (see the details here).
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, 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 real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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. You can subscribe to our free daily newsletter on our website. With all of this in mind we’re going to take a look at the fresh hedge fund action surrounding AT&T Inc. (NYSE:T).
Hedge fund activity in AT&T Inc. (NYSE:T)
At third quarter’s end, a total of 51 of the hedge funds tracked by Insider Monkey were long this stock, a change of -11% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in T over the last 21 quarters. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
Among these funds, D E Shaw held the most valuable stake in AT&T Inc. (NYSE:T), which was worth $309.7 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $291.8 million worth of shares. Adage Capital Management, Appaloosa Management LP, and D E Shaw 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 Game Creek Capital allocated the biggest weight to AT&T Inc. (NYSE:T), around 2.97% of its 13F portfolio. Stamos Capital is also relatively very bullish on the stock, designating 2.66 percent of its 13F equity portfolio to T.
Since AT&T Inc. (NYSE:T) has witnessed falling interest from hedge fund managers, it’s easy to see that there were a few hedgies who were dropping their full holdings in the third quarter. Intriguingly, Paul Singer’s Elliott Investment Management cut the biggest position of all the hedgies watched by Insider Monkey, worth an estimated $151.2 million in stock. Richard S. Pzena’s fund, Pzena Investment Management, also dropped its stock, about $22.4 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 6 funds in the third quarter.
Let’s go over hedge fund activity in other stocks similar to AT&T Inc. (NYSE:T). We will take a look at Novartis AG (NYSE:NVS), NIKE, Inc. (NYSE:NKE), Abbott Laboratories (NYSE:ABT), PepsiCo, Inc. (NYSE:PEP), SAP SE (NYSE:SAP), Toyota Motor Corporation (NYSE:TM), and Oracle Corporation (NASDAQ:ORCL). All of these stocks’ market caps are similar to T’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 42.6 hedge funds with bullish positions and the average amount invested in these stocks was $2567 million. That figure was $1159 million in T’s case. NIKE, Inc. (NYSE:NKE) is the most popular stock in this table. On the other hand Toyota Motor Corporation (NYSE:TM) is the least popular one with only 12 bullish hedge fund positions. AT&T Inc. (NYSE:T) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for T is 46.2. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and beat the market again by 16 percentage points. Unfortunately T wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on T were disappointed as the stock returned 3.9% since the end of September (through 12/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.