“The global economic environment is very favorable for investors. Economies are generally strong, but not too strong. Employment levels are among the strongest for many decades. Interest rates are paused at very low levels, and the risk of significant increases in the medium term seems low. Financing for transactions is freely available to good borrowers, but not in major excess. Covenants are lighter than they were five years ago, but the extreme excesses seen in the past do not seem prevalent yet today. Despite this apparent ‘goldilocks’ market environment, we continue to worry about a world where politics are polarized almost everywhere, interest rates are low globally, and equity valuations are at their peak,” are the words of Brookfield Asset Management. Brookfield was right about politics as stocks experienced their second worst May since the 1960s due to escalation of trade disputes. We pay attention to what hedge funds are doing in a particular stock before considering a potential investment because it works for us. So let’s take a glance at the smart money sentiment towards TELUS Corporation (NYSE:TU) and see how it was affected.
Is TELUS Corporation (NYSE:TU) a healthy stock for your portfolio? Investors who are in the know are in a bullish mood. The number of long hedge fund positions inched up by 4 recently. Our calculations also showed that TU isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). TU was in 17 hedge funds’ portfolios at the end of the third quarter of 2019. There were 13 hedge funds in our database with TU positions at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Jim Simons of Renaissance Technologies
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s take a glance at the latest hedge fund action regarding TELUS Corporation (NYSE:TU).
How have hedgies been trading TELUS Corporation (NYSE:TU)?
At Q3’s end, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 31% from one quarter earlier. By comparison, 12 hedge funds held shares or bullish call options in TU a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Renaissance Technologies, holds the largest position in TELUS Corporation (NYSE:TU). Renaissance Technologies has a $192.5 million position in the stock, comprising 0.2% of its 13F portfolio. On Renaissance Technologies’s heels is GLG Partners, led by Noam Gottesman, holding a $35.5 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining peers that are bullish encompass Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, David E. Shaw’s D E Shaw and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Unio Capital allocated the biggest weight to TELUS Corporation (NYSE:TU), around 0.17% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, dishing out 0.16 percent of its 13F equity portfolio to TU.
With a general bullishness amongst the heavyweights, specific money managers have jumped into TELUS Corporation (NYSE:TU) headfirst. Gotham Asset Management, managed by Joel Greenblatt, created the largest position in TELUS Corporation (NYSE:TU). Gotham Asset Management had $0.7 million invested in the company at the end of the quarter. Matthew Tewksbury’s Stevens Capital Management also initiated a $0.7 million position during the quarter. The following funds were also among the new TU investors: Michael Gelband’s ExodusPoint Capital and Paul Marshall and Ian Wace’s Marshall Wace.
Let’s go over hedge fund activity in other stocks similar to TELUS Corporation (NYSE:TU). We will take a look at M&T Bank Corporation (NYSE:MTB), Smith & Nephew plc (NYSE:SNN), Pioneer Natural Resources Company (NYSE:PXD), and AMETEK, Inc. (NYSE:AME). This group of stocks’ market values are closest to TU’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MTB | 29 | 1247730 | -2 |
| SNN | 6 | 297897 | -8 |
| PXD | 47 | 1014267 | -1 |
| AME | 29 | 963376 | -2 |
| Average | 27.75 | 880818 | -3.25 |
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 $881 million. That figure was $302 million in TU’s case. Pioneer Natural Resources Company (NYSE:PXD) is the most popular stock in this table. On the other hand Smith & Nephew plc (NYSE:SNN) is the least popular one with only 6 bullish hedge fund positions. TELUS Corporation (NYSE:TU) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on TU, though not to the same extent, as the stock returned 6% during the first two months of the fourth quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.
