Do Hedge Funds Love AT&T Inc. (T)?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the fourth quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of AT&T Inc. (NYSE:T) based on that data.

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. T has seen an increase in enthusiasm from smart money recently. There were 58 hedge funds in our database with T holdings at the end of December. Our calculations also showed that T isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In today’s marketplace there are a large number of gauges shareholders use to evaluate publicly traded companies. A pair of the most useful gauges are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the top picks of the best money managers can outclass the S&P 500 by a significant amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

David Siegel of Two Sigma Advisors

At Insider Monkey we leave no stone unturned when looking for 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 hydrogen fuel cell 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. Now let’s analyze the key hedge fund action regarding 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 held long positions in this stock, a change of 9% from the previous quarter. By comparison, 57 hedge funds held shares or bullish call options in T a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, D E Shaw, managed by D. E. Shaw, holds the number one position in AT&T Inc. (NYSE:T). D E Shaw has a $390.1 million position in the stock, comprising 0.4% of its 13F portfolio. Coming in second is Renaissance Technologies, with a $388.7 million position; 0.5% of its 13F portfolio is allocated to the stock. Other peers that hold long positions encompass John Overdeck and David Siegel’s Two Sigma Advisors, Phill Gross and Robert Atchinson’s Adage Capital Management and Ken Griffin’s Citadel Investment Group. 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, designating 4.24 percent of its 13F equity portfolio to T.

As industrywide interest jumped, specific money managers were breaking ground themselves. Force Hill Capital Management, managed by Suraj Parkash Chopra, established 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 also examine hedge fund activity in other stocks – not necessarily in the same industry as AT&T Inc. (NYSE:T) but similarly valued. We will take a look at 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 valuations resemble T’s market valuation.

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 17.2% in 2021 through June 11th and surpassed the market again by 3.3 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 -1.5% since the end of March (through 6/11) 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.

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