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Is Telefonica S.A. (ADR) (TEF) a Good Stock To Buy?

Due to the fact that Telefonica S.A. (ADR) (NYSE:TEF) has experienced a declination in interest from the smart money, it’s easy to see that there were a few hedgies who sold off their entire stakes heading into Q4. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dropped the biggest position of the 700 funds watched by Insider Monkey, totaling about $3.1 million in stock, and William B. Gray’s Orbis Investment Management was right behind this move, as the fund sold off about $1.9 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 1 funds heading into Q4.

Let’s go over hedge fund activity in other stocks similar to Telefonica S.A. (ADR) (NYSE:TEF). We will take a look at America Movil SAB de CV (ADR) (NYSE:AMX), Royal Bank of Scotland Group plc (ADR) (NYSE:RBS), Express Scripts Holding Company (NASDAQ:ESRX), and Twenty-First Century Fox Inc (NASDAQ:FOX). This group of stocks’ market values are similar to TEF’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AMX 12 239063 -2
RBS 6 7977 -7
ESRX 58 3434031 -4
FOX 32 4222046 -10

As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $1976 million. That figure was $10 million in TEF’s case. Express Scripts Holding Company (NASDAQ:ESRX) is the most popular stock in this table. On the other hand Royal Bank of Scotland Group plc (ADR) (NYSE:RBS) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Telefonica S.A. (ADR) (NYSE:TEF) is even less popular than RBS. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

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