Was The Smart Money Right About AT&T Inc. (T)?

We at Insider Monkey have gone over 887 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 December 31st. In this article, we look at what those funds think of AT&T Inc. (NYSE:T) based on that data.

AT&T Inc. (NYSE:T) was in 58 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 94. T has experienced an increase in support from the world’s most elite money managers recently. There were 51 hedge funds in our database with T positions at the end of the third quarter. Our calculations also showed that T isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Paul Singer ELLIOTT MANAGEMENT

Paul Singer of Elliott Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind we’re going to take a gander at the new hedge fund action encompassing AT&T Inc. (NYSE:T).

Do Hedge Funds Think T Is A Good Stock To Buy Now?

At Q4’s end, a total of 58 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from the previous quarter. On the other hand, there were a total of 50 hedge funds with a bullish position in T a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is T A Good Stock To Buy?

The largest stake in AT&T Inc. (NYSE:T) was held by D E Shaw, which reported holding $193.5 million worth of stock at the end of December. It was followed by Adage Capital Management with a $192.3 million position. Other investors bullish on the company included Elliott Investment Management, AQR Capital Management, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Kingstown Capital Management allocated the biggest weight to AT&T Inc. (NYSE:T), around 3.9% of its 13F portfolio. Kettle Hill Capital Management is also relatively very bullish on the stock, setting aside 3.54 percent of its 13F equity portfolio to T.

With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Elliott Investment Management, managed by Paul Singer, established the most valuable position in AT&T Inc. (NYSE:T). Elliott Investment Management had $143.8 million invested in the company at the end of the quarter. Andrew Kurita’s Kettle Hill Capital Management also made a $17.4 million investment in the stock during the quarter. The following funds were also among the new T investors: Nicholas Bagnall’s Te Ahumairangi Investment Management, Leonard Green’s Leonard Green & Partners, and Michael Blitzer’s Kingstown Capital Management.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as AT&T Inc. (NYSE:T) but similarly valued. These stocks are Pfizer Inc. (NYSE:PFE), salesforce.com, inc. (NYSE:CRM), Intel Corporation (NASDAQ:INTC), Abbott Laboratories (NYSE:ABT), Oracle Corporation (NASDAQ:ORCL), AbbVie Inc (NYSE:ABBV), and Cisco Systems, Inc. (NASDAQ:CSCO). All of these stocks’ market caps are closest to T’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PFE 63 1848417 -3
CRM 97 10576035 -9
INTC 72 5578824 6
ABT 64 4303482 2
ORCL 52 2450210 -4
ABBV 83 6965013 1
CSCO 60 4974309 1
Average 70.1 5242327 -0.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 70.1 hedge funds with bullish positions and the average amount invested in these stocks was $5242 million. That figure was $1045 million in T’s case. salesforce.com, inc. (NYSE:CRM) is the most popular stock in this table. On the other hand Oracle Corporation (NASDAQ:ORCL) is the least popular one with only 52 bullish hedge fund positions. AT&T Inc. (NYSE:T) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for T is 35.2. 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on T, though not to the same extent, as the stock returned 13% since the end of Q4 (through April 30th) and outperformed the market.

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