Was The Smart Money Right About T-Mobile US, Inc. (TMUS)?

After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of June 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards T-Mobile US, Inc. (NASDAQ:TMUS).

T-Mobile US, Inc. (NASDAQ:TMUS) has seen an increase in hedge fund interest lately. T-Mobile US, Inc. (NASDAQ:TMUS) was in 100 hedge funds’ portfolios at the end of June. The all time high for this statistic is 113. Our calculations also showed that TMUS ranked 19th among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Today there are a lot of methods shareholders put to use to analyze publicly traded companies. A duo of the most under-the-radar methods are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the top money managers can beat their index-focused peers by a superb amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. Recently we came across a high growth stock that has tons of hidden assets and is trading at an extremely cheap valuation. We go through lists like the 10 best growth stocks to buy 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 let’s view the recent hedge fund action encompassing T-Mobile US, Inc. (NASDAQ:TMUS).

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

At the end of June, a total of 100 of the hedge funds tracked by Insider Monkey were long this stock, a change of 2% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in TMUS over the last 24 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Viking Global, managed by Andreas Halvorsen, holds the number one position in T-Mobile US, Inc. (NASDAQ:TMUS). Viking Global has a $1.0923 billion position in the stock, comprising 3.3% of its 13F portfolio. Sitting at the No. 2 spot is John Armitage of Egerton Capital Limited, with a $962.9 million position; the fund has 4.8% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that hold long positions comprise Warren Buffett’s Berkshire Hathaway, Farallon Capital and Daniel Sundheim’s D1 Capital Partners. In terms of the portfolio weights assigned to each position BlueDrive Global Investors allocated the biggest weight to T-Mobile US, Inc. (NASDAQ:TMUS), around 19.92% of its 13F portfolio. RIT Capital Partners is also relatively very bullish on the stock, setting aside 13.85 percent of its 13F equity portfolio to TMUS.

With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Tremblant Capital, managed by Brett Barakett, created the biggest position in T-Mobile US, Inc. (NASDAQ:TMUS). Tremblant Capital had $128.6 million invested in the company at the end of the quarter. Josh Resnick’s Jericho Capital Asset Management also made a $84 million investment in the stock during the quarter. The other funds with new positions in the stock are Anthony Bozza’s Lakewood Capital Management, Marc Lisker, Glenn Fuhrman and John Phelan’s MSDC Management, and James Crichton’s Hitchwood Capital Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as T-Mobile US, Inc. (NASDAQ:TMUS) but similarly valued. We will take a look at Texas Instruments Incorporated (NASDAQ:TXN), Costco Wholesale Corporation (NASDAQ:COST), McDonald’s Corporation (NYSE:MCD), Morgan Stanley (NYSE:MS), Medtronic plc (NYSE:MDT), SAP SE (NYSE:SAP), and QUALCOMM, Incorporated (NASDAQ:QCOM). This group of stocks’ market values match TMUS’s market value.

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As you can see these stocks had an average of 56.6 hedge funds with bullish positions and the average amount invested in these stocks was $3413 million. That figure was $8021 million in TMUS’s case. QUALCOMM, Incorporated (NASDAQ:QCOM) is the most popular stock in this table. On the other hand SAP SE (NYSE:SAP) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks T-Mobile US, Inc. (NASDAQ:TMUS) is more popular among hedge funds. Our overall hedge fund sentiment score for TMUS is 87.5. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 26.3% in 2021 through October 29th and still beat the market by 2.3 percentage points. Unfortunately TMUS wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on TMUS were disappointed as the stock returned -20.6% since the end of the second quarter (through 10/29) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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