Here is What Hedge Funds Think About Sprint Corp (S)

Before we spend days researching a stock idea we’d like to take a look at how hedge funds and billionaire investors recently traded that stock. S&P 500 Index returned about 7.6% during the last 12 months ending November 21, 2016. Most investors don’t notice that less than 49% of the stocks in the index outperformed the index. This means you (or a monkey throwing a dart) have less than an even chance of beating the market by randomly picking a stock. On the other hand, the top 30 mid-cap stocks among the best performing hedge funds had an average return of 18% during the same period. Hedge funds had bad stock picks like everyone else. We are sure you have read about their worst picks, like Valeant, in the media over the past year. So, taking cues from hedge funds isn’t a foolproof strategy, but it seems to work on average. In this article, we will take a look at what hedge funds think about Sprint Corp (NYSE:S).

Is Sprint Corp (NYSE:S) going to take off soon? Money managers are turning bullish. The number of bullish hedge fund positions inched up by 9 in recent months. S was in 29 hedge funds’ portfolios at the end of September. There were 20 hedge funds in our database with S positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Dr Pepper Snapple Group Inc. (NYSE:DPS), The Clorox Company (NYSE:CLX), and DTE Energy Co (NYSE:DTE) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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Hedge fund activity in Sprint Corp (NYSE:S)

Heading into the fourth quarter of 2016, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a gain of 45% from the second quarter of 2016. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Discovery Capital Management, managed by Rob Citrone, holds the biggest position in Sprint Corp (NYSE:S). Discovery Capital Management has a $158 million position in the stock, comprising 3.3% of its 13F portfolio. On Discovery Capital Management’s heels is Jericho Capital Asset Management, managed by Josh Resnick, which holds a $67.5 million position; the fund has 2.7% of its 13F portfolio invested in the stock. Remaining peers with similar optimism consist of  Malcolm Fairbairn’s Ascend Capital and Cliff Asness’ AQR Capital Management.

As industrywide interest jumped, some big names were leading the bulls’ herd. Jericho Capital Asset Management, initiated the biggest position in Sprint Corp (NYSE:S). Benjamin A. Smith’s Laurion Capital Management also initiated a $19.6 million position during the quarter. The following funds were also among the new S investors: Ascend Capital, Louis Bacon’s Moore Global Investments, and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital.

Let’s now review hedge fund activity in other stocks similar to Sprint Corp (NYSE:S). These stocks are Dr Pepper Snapple Group Inc. (NYSE:DPS), The Clorox Company (NYSE:CLX), DTE Energy Co (NYSE:DTE), and The J.M. Smucker Company (NYSE:SJM). This group of stocks’ market caps resemble S’s market cap.

As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $895 million. That figure was $331 million in S’s case. Dr Pepper Snapple Group Inc. (NYSE:DPS) is the most popular stock in this table. On the other hand DTE Energy Co (NYSE:DTE) is the least popular one with only 20 bullish hedge fund positions. Sprint Corp (NYSE:S) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard DPS might be a better candidate to consider a long position.

Disclosure: None