Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of AT&T Inc. (NYSE:T).
Is AT&T Inc. (NYSE:T) a bargain? Money managers were turning bullish. The number of bullish hedge fund bets improved by 5 in recent months. AT&T Inc. (NYSE:T) was in 63 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 94. Our calculations also showed that T isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 58 hedge funds in our database with T holdings at the end of December.
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.
Robert Pohly of Samlyn Capital
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 review the fresh hedge fund action surrounding AT&T Inc. (NYSE:T).
Do Hedge Funds Think T Is A Good Stock To Buy Now?
At first quarter’s end, a total of 63 of the hedge funds tracked by Insider Monkey were long this stock, a change of 9% from the fourth quarter of 2020. By comparison, 57 hedge funds held shares or bullish call options in T a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
Among these funds, D E Shaw held the most valuable stake in AT&T Inc. (NYSE:T), which was worth $390.1 million at the end of the fourth quarter. On the second spot was Renaissance Technologies which amassed $388.7 million worth of shares. Two Sigma Advisors, Adage Capital Management, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Zeno Research allocated the biggest weight to AT&T Inc. (NYSE:T), around 7.82% of its 13F portfolio. Stamos Capital is also relatively very bullish on the stock, earmarking 4.24 percent of its 13F equity portfolio to T.
With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. Force Hill Capital Management, managed by Suraj Parkash Chopra, created the most outsized position in AT&T Inc. (NYSE:T). Force Hill Capital Management had $20.7 million invested in the company at the end of the quarter. Jonathan Kolatch’s Redwood Capital Management also initiated a $7 million position during the quarter. The other funds with brand new T positions are Robert Pohly’s Samlyn Capital, Felix Wai’s Zeno Research, and Dmitry Balyasny’s Balyasny Asset Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as AT&T Inc. (NYSE:T) but similarly valued. These stocks are Abbott Laboratories (NYSE:ABT), NIKE, Inc. (NYSE:NKE), Oracle Corporation (NYSE:ORCL), Pfizer Inc. (NYSE:PFE), Chevron Corporation (NYSE:CVX), PepsiCo, Inc. (NASDAQ:PEP), and salesforce.com, inc. (NYSE:CRM). This group of stocks’ market caps match T’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ABT | 65 | 5136552 | 1 |
| NKE | 78 | 5176711 | -4 |
| ORCL | 52 | 2888444 | 0 |
| PFE | 65 | 2014186 | 2 |
| CVX | 41 | 4866758 | -9 |
| PEP | 61 | 4882404 | 5 |
| CRM | 91 | 8837040 | -6 |
| Average | 64.7 | 4828871 | -1.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 64.7 hedge funds with bullish positions and the average amount invested in these stocks was $4829 million. That figure was $2702 million in T’s case. salesforce.com, inc. (NYSE:CRM) is the most popular stock in this table. On the other hand Chevron Corporation (NYSE:CVX) is the least popular one with only 41 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 52.1. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 surpassed the market again by 6.7 percentage points. Unfortunately T wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); T investors were disappointed as the stock returned -4.3% since the end of March (through 8/6) 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 in 2021.
Follow At&T Inc. (NYSE:T)
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Disclosure: None. This article was originally published at Insider Monkey.
