The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Sprint Corporation (NYSE:S) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Is Sprint Corporation (NYSE:S) going to take off soon? Money managers are taking a bullish view. The number of bullish hedge fund positions moved up by 6 recently. Our calculations also showed that S isn’t among the 30 most popular stocks among hedge funds. S was in 20 hedge funds’ portfolios at the end of the third quarter of 2018. There were 14 hedge funds in our database with S holdings at the end of the previous quarter.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
We’re going to go over the recent hedge fund action surrounding Sprint Corporation (NYSE:S).
Hedge fund activity in Sprint Corporation (NYSE:S)
Heading into the fourth quarter of 2018, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 43% from the previous quarter. By comparison, 18 hedge funds held shares or bullish call options in S heading into this year. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
Among these funds, Magnetar Capital held the most valuable stake in Sprint Corporation (NYSE:S), which was worth $178.3 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $74.3 million worth of shares. Moreover, Odey Asset Management Group, Alpine Associates, and Millennium Management were also bullish on Sprint Corporation (NYSE:S), allocating a large percentage of their portfolios to this stock.
With a general bullishness amongst the heavyweights, some big names have jumped into Sprint Corporation (NYSE:S) headfirst. Millennium Management, managed by Israel Englander, established the biggest position in Sprint Corporation (NYSE:S). Millennium Management had $29.7 million invested in the company at the end of the quarter. George Soros’s Soros Fund Management also made a $22.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Kevin D. Eng’s Columbus Hill Capital Management, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Sprint Corporation (NYSE:S) but similarly valued. These stocks are T. Rowe Price Group, Inc. (NASDAQ:TROW), McKesson Corporation (NYSE:MCK), Paychex, Inc. (NASDAQ:PAYX), and PPG Industries, Inc. (NYSE:PPG). This group of stocks’ market caps match S’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TROW | 17 | 396447 | -8 |
| MCK | 42 | 2977552 | 2 |
| PAYX | 30 | 1076148 | 6 |
| PPG | 22 | 655098 | 3 |
| Average | 27.75 | 1276311 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.75 hedge funds with bullish positions and the average amount invested in these stocks was $1.28 billion. That figure was $433 million in S’s case. McKesson Corporation (NYSE:MCK) is the most popular stock in this table. On the other hand T. Rowe Price Group, Inc. (NASDAQ:TROW) is the least popular one with only 17 bullish hedge fund positions. Sprint Corporation (NYSE:S) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MCK might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
