Is Charter Communications, Inc. (CHTR) A Good Stock To Buy?

Is Charter Communications, Inc. (NASDAQ:CHTR) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Charter Communications, Inc. (NASDAQ:CHTR) has experienced an increase in activity from the world’s largest hedge funds in recent months. Our calculations also showed that chtr isn’t among the 30 most popular stocks among hedge funds.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

John Armitage Egerton Capital

Let’s take a peek at the fresh hedge fund action surrounding Charter Communications, Inc. (NASDAQ:CHTR).

How have hedgies been trading Charter Communications, Inc. (NASDAQ:CHTR)?

At Q1’s end, a total of 67 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CHTR over the last 15 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with CHTR Positions

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Berkshire Hathaway, managed by Warren Buffett, holds the most valuable position in Charter Communications, Inc. (NASDAQ:CHTR). Berkshire Hathaway has a $1.9811 billion position in the stock, comprising 1% of its 13F portfolio. The second largest stake is held by Egerton Capital Limited, led by John Armitage, holding a $987.6 million position; 7% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors that hold long positions consist of Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC, Vinit Bodas’s Deccan Value Advisors and Mark Massey’s AltaRock Partners.

As aggregate interest increased, key money managers were leading the bulls’ herd. Renaissance Technologies, managed by Jim Simons, initiated the most outsized position in Charter Communications, Inc. (NASDAQ:CHTR). Renaissance Technologies had $156.5 million invested in the company at the end of the quarter. James Crichton’s Hitchwood Capital Management also initiated a $52 million position during the quarter. The other funds with brand new CHTR positions are Michael Pausic’s Foxhaven Asset Management, Kelly Hampaul’s Everett Capital Advisors, and D. E. Shaw’s D E Shaw.

Let’s now take a look at hedge fund activity in other stocks similar to Charter Communications, Inc. (NASDAQ:CHTR). These stocks are Caterpillar Inc. (NYSE:CAT), Bristol Myers Squibb Company (NYSE:BMY), U.S. Bancorp (NYSE:USB), and China Life Insurance Company Ltd. (NYSE:LFC). This group of stocks’ market caps match CHTR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CAT 53 3394463 -7
BMY 71 4098599 13
USB 44 6941152 3
LFC 7 38797 0
Average 43.75 3618253 2.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 43.75 hedge funds with bullish positions and the average amount invested in these stocks was $3618 million. That figure was $7392 million in CHTR’s case. Bristol Myers Squibb Company (NYSE:BMY) is the most popular stock in this table. On the other hand China Life Insurance Company Ltd. (NYSE:LFC) is the least popular one with only 7 bullish hedge fund positions. Charter Communications, Inc. (NASDAQ:CHTR) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on CHTR as the stock returned 9.3% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.

Disclosure: None. This article was originally published at Insider Monkey.