Do Hedge Funds Love Charter Communications, Inc. (CHTR)?

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Charter Communications, Inc. (NASDAQ:CHTR) shareholders have witnessed a slight increase in hedge fund sentiment in recent months. CHTR was in 89 hedge funds’ portfolios at the end of the fourth quarter of 2015. There were 87 hedge funds in our database with CHTR positions at the end of the previous quarter. At the end of this article we will also compare CHTR to other stocks, including Southern Copper Corp (NYSE:SCCO), Intuitive Surgical, Inc. (NASDAQ:ISRG), and Incyte Corporation (NASDAQ:INCY) to get a better sense of its popularity.

In today’s marketplace there are numerous gauges investors use to size up publicly traded companies. Two of the less known gauges are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the best picks of the best money managers can outclass the market by a solid amount (see the details here).

Charter Communications is currently in the process of acquiring Time Warner Cable in a deal valued at $56 billion. The transaction was announced in May and has been approved by shareholders of both companies. However, since the merger is going to create the second-largest cable and broadband player in the industry, many competitors, as well as lawmakers have expressed concerns regarding the deal.

Recently, Senate Democratic leader Harry Reid has expressed his concerns about Charter’s acquisition of Time Warner Cable and in a letter sent to Federal Communications Commission Chairman Tom Wheeler and Attorney General Loretta Lynch, he said that the merger might create barriers for competition in the broadband space. It should be noted that if the deal is completed, the two main players on the market will be Comcast and Charter-Time Warner Cable, which poses the risk of turning the market into a duopoly. Among other lawmakers that expressed their concerns regarding the deal between Charter and Time Warner Cable are presidential candidate Bernie Sander and senators Elizabeth Warren and Mike Lee.

Meanwhile, Charter’s stock has inched down by slightly more than 2% over the last 52 weeks as investors are looking forward to the merger. On the following page, we’re going to go over the latest action surrounding Charter Communications, Inc. (NASDAQ:CHTR).

What does the smart money think about Charter Communications, Inc. (NASDAQ:CHTR)?

Heading into 2016, a total of 89 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 2% from the third quarter. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Warren Buffett’s Berkshire Hathaway has the biggest position in Charter Communications, Inc. (NASDAQ:CHTR), worth close to $1.88 billion, corresponding to 1.4% of its total 13F portfolio. The second largest stake is held by Lone Pine Capital, managed by Stephen Mandel, which holds a $865.6 million position; the fund has 3.7% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions encompass John H. Scully’s SPO Advisory Corp, William B. Gray’s Orbis Investment Management and Philippe Laffont’s Coatue Management.

With a general bullishness amongst the heavyweights, specific money managers have jumped into Charter Communications, Inc. (NASDAQ:CHTR) headfirst. Maverick Capital, managed by Lee Ainslie, created the most outsized position in Charter Communications, Inc. (NASDAQ:CHTR). Maverick Capital had $174.4 million invested in the company at the end of the quarter. Howard Guberman’s Gruss Asset Management also made a $139.2 million investment in the stock during the fourth quarter. The other funds with brand new CHTR positions are Yen Liow’s Aravt Global, Jacob Doft’s Highline Capital Management, and John Lykouretzos’s Hoplite Capital Management.

Let’s check out hedge fund activity in other stocks similar to Charter Communications, Inc. (NASDAQ:CHTR). These stocks are Southern Copper Corp (NYSE:SCCO), Intuitive Surgical, Inc. (NASDAQ:ISRG), Incyte Corporation (NASDAQ:INCY), and Baker Hughes Incorporated (NYSE:BHI). This group of stocks’ market valuations are closest to CHTR’s market valuation.

As you can see these stocks had an average of 31 hedge funds with bullish positions and the average amount invested in these stocks was $1.77 billion. That figure was $10.85 billion in CHTR’s case. Baker Hughes Incorporated (NYSE:BHI) is the most popular stock in this table with a total of 47 funds holding long positions, while Southern Copper Corp (NYSE:SCCO) is the least popular one. Compared to these stocks Charter Communications, Inc. (NASDAQ:CHTR) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.