Is CenturyLink, Inc. (CTL) A Good Stock To Buy?

Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.

CenturyLink, Inc. (NYSE:CTL) investors should pay attention to a decrease in enthusiasm from smart money of late. CTL was in 24 hedge funds’ portfolios at the end of the third quarter of 2015. There were 31 hedge funds in our database with CTL holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Tyco International Ltd. (NYSE:TYC), Pearson PLC (ADR) (NYSE:PSO), and Weyerhaeuser Company (NYSE:WY) to gather more data points.

In the 21st century investor’s toolkit there are tons of formulas investors put to use to appraise stocks. A duo of the best formulas are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the best money managers can trounce the market by a very impressive amount (see the details here).

With all of this in mind, let’s take a glance at the fresh action regarding CenturyLink, Inc. (NYSE:CTL).

Hedge fund activity in CenturyLink, Inc. (NYSE:CTL)

At the end of the third quarter, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a reduction of 23% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Israel Englander’s Millennium Management has the biggest position in CenturyLink, Inc. (NYSE:CTL), worth close to $70.5 million, comprising 0.1% of its total 13F portfolio. The second largest stake is held by HBK Investments, led by David Costen Haley, holding a $39.1 million call position; the fund has 0.5% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism include Ray Dalio’s Bridgewater Associates, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Cliff Asness’s AQR Capital Management.

Seeing as CenturyLink, Inc. (NYSE:CTL) has faced a declination in interest from the aggregate hedge fund industry, logic holds that there exists a select few hedgies who sold off their entire stakes in the third quarter. It’s worth mentioning that Peter Muller’s PDT Partners sold off the biggest investment of all the hedgies followed by Insider Monkey, comprising close to $33.8 million in stock, and David Harding’s Winton Capital Management was right behind this move, as the fund dropped about $12.6 million worth of shares. These transactions are important to note, as total hedge fund interest fell by 7 funds in the third quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as CenturyLink, Inc. (NYSE:CTL) but similarly valued. We will take a look at Tyco International Ltd. (NYSE:TYC), Pearson PLC (ADR) (NYSE:PSO), Weyerhaeuser Company (NYSE:WY), and Principal Financial Group Inc (NYSE:PFG). This group of stocks’ market valuations resemble CTL’s market valuation.

As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $563 million. That figure was $297 million in CTL’s case. Tyco International Ltd. (NYSE:TYC) is the most popular stock in this table, while Pearson PLC (ADR) (NYSE:PSO) is the least popular one with only 4 bullish hedge fund positions. CenturyLink, Inc. (NYSE:CTL) is not the most popular stock in this group, but hedge fund interest is still above average. Although this is a slightly positive signal, we’d rather spend our time researching stocks that hedge funds are piling on. In this regard TYC might be a better candidate to consider a long position.