05. T-Mobile US, Inc. (NASDAQ:TMUS)
Number of Hedge Fund Holders: 69
On June 13, T-Mobile US, Inc. (NASDAQ:TMUS) announced that T-Mobile Advertising Solutions has teamed up with Uber to expand Uber’s JourneyTV across over 50,000 rideshare vehicles nationwide. This partnership integrates T-Mobile’s Octopus Interactive network, offering advertisers a direct way to engage with Uber riders during their trips with personalized recommendations and relevant ads based on Uber’s data insights. This collaboration enhances the ride experience for both riders and advertisers, providing targeted campaign opportunities on T-Mobile US, Inc. (NASDAQ:TMUS) extensive rideshare network. On June 10, Bank of America increased their target price on T-Mobile US from $175.00 to $195.00 and assigned the company a “buy” rating.
In the first quarter of 2024, the number of hedge funds with stakes in T-Mobile US, Inc. (NASDAQ:TMUS) decreased to 69 from 75 in the previous quarter, according to Insider Monkey’s database of 920 hedge funds. The combined value of these stakes is approximately $3.09 billion. Warren Buffett’s Berkshire Hathaway emerged as the largest stakeholder among these hedge funds during this period.
ClearBridge Dividend Strategy made the following comment about T-Mobile US, Inc. (NASDAQ:TMUS) in its Q3 2023 investor letter:
“During the quarter we initiated positions in two new names: T-Mobile US, Inc. (NASDAQ:TMUS) and Gilead Sciences. T-Mobile is the best-in-class player in the wireless space, delivering the strongest growth with the lowest cost structure and the best consumer proposition. T-Mobile’s strength is rooted in its advantaged competitive position. Its superior spectrum holdings enable it to provide better wireless service at meaningfully lower cost. T-Mobile’s annual capital expenditures run about $10 billion, on the order of half the amount its peers must spend. Due to its lower cost structure, T-Mobile can undercut its competitors on price while still generating compelling profitability and returns.
This combination — superior service at lower prices — has enabled T-Mobile to outgrow its competition. In the three years since completing its merger with Sprint, T-Mobile has grown its post-paid subscriber base by about 22%. Over the same period, AT&T’s has grown by about 14%, while Verizon’s by less than 5%.
Given the high fixed-cost nature of the wireless business, these steady increases in revenue growth have led to outsize increases in profits and free cash flow. Free cash flow in 2023 is expected to come in around $13.5 billion, up from less than $8 billion last year. In 2024 free cash flow is expected to grow by over 20% to approximately $17 billion — providing a 10% yield based on today’s stock price.
We have long admired T-Mobile, but until recently the stock did not pay a dividend. The company announced its inaugural dividend in September, and we bought the stock shortly thereafter. The initial yield is about 2% and it is expected to grow about 10% per year.”
