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

At Insider Monkey we follow nearly 750 of the best-performing investors and even though many of them lost money in the last couple of months of 2018 (some actually delivered very strong returns), the history teaches us that over the long-run they still manage to beat the market, which is why it can be profitable for us to imitate their activity. Of course, even the best money managers can sometimes get it wrong, but following some of their picks gives us a better chance to outperform the crowd than picking a random stock and this is where our research comes in.

Is T-Mobile US, Inc. (NASDAQ:TMUS) the right pick for your portfolio? Prominent investors are in a pessimistic mood. The number of bullish hedge fund positions went down by 5 in recent months. Our calculations also showed that TMUS is among the 30 most popular stocks among hedge funds, ranking 23rd. TMUS was in 75 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 80 hedge funds in our database with TMUS positions at the end of the previous quarter.

To the average investor there are numerous tools investors can use to grade publicly traded companies. Two of the most under-the-radar tools are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the top hedge fund managers can outclass their index-focused peers by a superb amount (see the details here).

Andreas Halvorsen

We’re going to take a gander at the fresh hedge fund action regarding T-Mobile US, Inc. (NASDAQ:TMUS).

How are hedge funds trading T-Mobile US, Inc. (NASDAQ:TMUS)?

Heading into the first quarter of 2019, a total of 75 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards TMUS over the last 14 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

TMUS_mar2019

Among these funds, Citadel Investment Group held the most valuable stake in T-Mobile US, Inc. (NASDAQ:TMUS), which was worth $445 million at the end of the third quarter. On the second spot was D E Shaw which amassed $262.7 million worth of shares. Moreover, Viking Global, Palestra Capital Management, and Maverick Capital were also bullish on T-Mobile US, Inc. (NASDAQ:TMUS), allocating a large percentage of their portfolios to this stock.

Seeing as T-Mobile US, Inc. (NASDAQ:TMUS) has witnessed falling interest from the entirety of the hedge funds we track, we can see that there were a few hedge funds that slashed their positions entirely by the end of the third quarter. Interestingly, Eashwar Krishnan’s Tybourne Capital Management dumped the largest investment of the 700 funds watched by Insider Monkey, totaling an estimated $331.6 million in stock, and Anand Desai’s Darsana Capital Partners was right behind this move, as the fund dumped about $154.4 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 5 funds by the end of the third quarter.

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 PNC Financial Services Group Inc. (NYSE:PNC), Enterprise Products Partners L.P. (NYSE:EPD), Shire PLC (NASDAQ:SHPG), and The Kraft Heinz Company (NASDAQ:KHC). This group of stocks’ market values resemble TMUS’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PNC 38 2161923 -2
EPD 25 415392 3
SHPG 63 5318274 -5
KHC 33 14561980 -4
Average 39.75 5614392 -2

View table here if you experience formatting issues.

As you can see these stocks had an average of 39.75 hedge funds with bullish positions and the average amount invested in these stocks was $5614 million. That figure was $3616 million in TMUS’s case. Shire PLC (NASDAQ:SHPG) is the most popular stock in this table. On the other hand Enterprise Products Partners L.P. (NYSE:EPD) is the least popular one with only 25 bullish hedge fund positions. Compared to these stocks T-Mobile US, Inc. (NASDAQ:TMUS) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Hedge funds were also right about betting on TMUS as the stock returned 15.5% and outperformed the market as well.

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

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