Hedge funds are not perfect. They have their bad picks just like everyone else. Micron, a stock hedge funds have loved, lost 50% during the last 12 months ending in October 30. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% in the same time period, vs. a gain of 5.2% for the S&P 500 Index. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of United States Cellular Corporation (NYSE:USM).
United States Cellular Corporation (NYSE:USM) is not a very popular stock among the funds we track and 12 funds reported long positions in the company as of the end of September, compared to 15 funds a quarter earlier. With this in mind, we have decided to take a closer look at the funds that are betting on the stock. At the end of this article we will also compare USM to other stocks, including Controladora Vuela Co Avcn SA CV (ADR) (NYSE:VLRS), Charles River Laboratories (NYSE:CRL), and Leidos Holdings Inc (NYSE:LDOS) to get a better sense of its popularity.
Follow United States Cellular Corp (NYSE:USM)
Follow United States Cellular Corp (NYSE:USM)
At the moment there are a lot of tools investors have at their disposal to appraise publicly traded companies. Some of the most under-the-radar tools are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the best fund managers can outperform the market by a healthy amount (see the details here).
Keeping this in mind, we’re going to view the fresh action surrounding United States Cellular Corporation (NYSE:USM).
How have hedgies been trading United States Cellular Corporation (NYSE:USM)?
At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, down by 20% over the quarter. Among these investors, GAMCO Investors, managed by Mario Gabelli, holds the biggest position in United States Cellular Corporation (NYSE:USM). GAMCO Investors has a $115.3 million position in the stock, comprising 0.8% of its 13F portfolio. On GAMCO Investors’s heels is Renaissance Technologies, with an $18.3 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism encompass Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Israel Englander’s Millennium Management, and D. E. Shaw’s D E Shaw.
Because United States Cellular Corporation (NYSE:USM) has experienced falling interest from the smart money, we can see that there is a sect of money managers who sold off their positions entirely heading into Q4. At the top of the heap, David Warren’s DW Partners cut the largest stake of all the hedgies watched by Insider Monkey, totaling an estimated $2.2 million in stock. Glenn Russell Dubin’s fund, Highbridge Capital Management, also sold off its stock, about $2.1 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 3 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks similar to United States Cellular Corporation (NYSE:USM). We will take a look at Controladora Vuela Co Avcn SA CV (ADR) (NYSE:VLRS), Charles River Laboratories (NYSE:CRL), Leidos Holdings Inc (NYSE:LDOS), and EPR Properties (NYSE:EPR). All of these stocks’ market caps resemble USM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VLRS | 12 | 58989 | 3 |
| CRL | 27 | 397360 | -3 |
| LDOS | 24 | 116818 | 1 |
| EPR | 18 | 184115 | 3 |
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $189 million. That figure was $147 million in USM’s case. Charles River Laboratories (NYSE:CRL) is the most popular stock in this table. On the other hand Controladora Vuela Co Avcn SA CV (ADR) (NYSE:VLRS) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks United States Cellular Corporation (NYSE:USM) is even less popular than VLRS. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
