Were Hedge Funds Right About T-Mobile US, Inc. (TMUS)?

Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards T-Mobile US, Inc. (NYSE:TMUS) changed recently.

T-Mobile US, Inc. (NYSE:TMUS) was in 98 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 113. TMUS investors should be aware of a decrease in hedge fund interest of late. There were 103 hedge funds in our database with TMUS positions at the end of the fourth quarter. Our calculations also showed that TMUS ranked #22 among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

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At Insider Monkey, we scour multiple sources to uncover 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 EV 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. With all of this in mind we’re going to take a look at the key hedge fund action encompassing T-Mobile US, Inc. (NYSE:TMUS).

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

Heading into the second quarter of 2021, a total of 98 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards TMUS over the last 23 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is TMUS A Good Stock To Buy?

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Viking Global, managed by Andreas Halvorsen, holds the largest position in T-Mobile US, Inc. (NYSE:TMUS). Viking Global has a $1.2886 billion position in the stock, comprising 3.8% of its 13F portfolio. Sitting at the No. 2 spot is Egerton Capital Limited, managed by John Armitage, which holds a $904.8 million position; the fund has 4.8% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions contain Warren Buffett’s Berkshire Hathaway, Daniel Sundheim’s D1 Capital Partners and David Tepper’s Appaloosa Management LP. In terms of the portfolio weights assigned to each position Fernbridge Capital Management allocated the biggest weight to T-Mobile US, Inc. (NYSE:TMUS), around 15.06% of its 13F portfolio. Tekne Capital Management is also relatively very bullish on the stock, setting aside 12.72 percent of its 13F equity portfolio to TMUS.

Judging by the fact that T-Mobile US, Inc. (NYSE:TMUS) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of hedge funds that decided to sell off their positions entirely last quarter. Interestingly, Josh Resnick’s Jericho Capital Asset Management dropped the biggest investment of all the hedgies followed by Insider Monkey, comprising an estimated $142 million in stock, and Michael Pausic’s Foxhaven Asset Management was right behind this move, as the fund cut about $111.2 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 5 funds last quarter.

Let’s check out hedge fund activity in other stocks similar to T-Mobile US, Inc. (NYSE:TMUS). These stocks are Citigroup Inc. (NYSE:C), Royal Dutch Shell plc (NYSE:RDS), Honeywell International Inc. (NYSE:HON), QUALCOMM, Incorporated (NASDAQ:QCOM), The Boeing Company (NYSE:BA), NextEra Energy, Inc. (NYSE:NEE), and United Parcel Service, Inc. (NYSE:UPS). All of these stocks’ market caps are closest to TMUS’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
C 90 6938143 -5
RDS 36 2190186 2
HON 56 1731346 11
QCOM 73 2765985 -12
BA 59 1437584 4
NEE 63 2725995 2
UPS 44 1346598 -4
Average 60.1 2733691 -0.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 60.1 hedge funds with bullish positions and the average amount invested in these stocks was $2734 million. That figure was $9056 million in TMUS’s case. Citigroup Inc. (NYSE:C) is the most popular stock in this table. On the other hand Royal Dutch Shell plc (NYSE:RDS) is the least popular one with only 36 bullish hedge fund positions. Compared to these stocks T-Mobile US, Inc. (NYSE:TMUS) is more popular among hedge funds. Our overall hedge fund sentiment score for TMUS is 76. 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 25.8% in 2021 through August 6th and still managed to beat the market by 6.7 percentage points. Hedge funds were also right about betting on TMUS, though not to the same extent, as the stock returned 13.5% since the end of March (through August 6th) and outperformed the market as well.

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