How Has Smart Money Been Trading Charter Communications, Inc. (CHTR)?

The third quarter was a rough one for most investors, as fears of an interest rate hike in the U.S, a weakening economy in China, and a stagnant Europe, weighed heavily on the minds of investors. Both the S&P 500 and Russell 2000 sank as a result, with the Russell 2000, which is composed of smaller companies, being hit especially hard. This was primarily due to hedge funds, which are big supporters of small-cap stocks, pulling some of their capital out of the volatile markets during this time. Let’s look at how this market volatility affected the sentiment of hedge funds towards Charter Communications, Inc. (NASDAQ:CHTR), and what that likely means for the prospects of the company and its stock.

Charter Communications, Inc. (NASDAQ:CHTR) shareholders have witnessed a decrease in enthusiasm from smart money of late. CHTR was in 87 hedge funds’ portfolios at the end of the third quarter of 2015. There were 96 hedge funds in our database with CHTR holdings at the end of the previous quarter. At the end of this article we will also compare CHTR to other stocks, including Sun Life Financial Inc. (USA) (NYSE:SLF), Moody’s Corporation (NYSE:MCO), and SunTrust Banks, Inc. (NYSE:STI) to get a better sense of its popularity.

In the financial world, there are numerous signals stock market investors can use to evaluate publicly traded companies. A pair of the most underrated signals are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the top money managers can trounce the S&P 500 by a healthy amount (see the details here).

With all of this in mind, let’s take a glance at the fresh action surrounding Charter Communications, Inc. (NASDAQ:CHTR).

Hedge fund activity in Charter Communications, Inc. (NASDAQ:CHTR)

At the Q3’s end, a total of 87 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -9% from the previous quarter. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Berkshire Hathaway, managed by Warren Buffett, holds the biggest position in Charter Communications, Inc. (NASDAQ:CHTR). Berkshire Hathaway has a $1.81 billion position in the stock, comprising 1.4% of its 13F portfolio. The second most bullish fund is Stephen Mandel’sLone Pine Capital, with a $1.15 billion position; 4.7% of its 13F portfolio is allocated to the company. Other professional money managers that are bullish encompass John H. Scully’s SPO Advisory Corp and William B. Gray’s Orbis Investment Management.

Since Charter Communications, Inc. (NASDAQ:CHTR) has experienced a bearish sentiment from the entirety of the hedge funds we track, logic holds that there is a sect of money managers that decided to sell off their entire stakes in the third quarter. It’s worth mentioning that Lee Ainslie’s Maverick Capital dropped the largest position of the 700 funds monitored by Insider Monkey, totaling about $153.6 million in stock, and Jim Simons’s Renaissance Technologies was right behind this move, as the fund dumped about $79.8 million worth of shares. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 9 funds in the third quarter.

Let’s now review hedge fund activity in other stocks similar to Charter Communications, Inc. (NASDAQ:CHTR). We will take a look at Sun Life Financial Inc. (USA) (NYSE:SLF), Moody’s Corporation (NYSE:MCO), SunTrust Banks, Inc. (NYSE:STI), and Magna International Inc. (USA) (NYSE:MGA). All of these stocks’ market caps are similar to CHTR’s market cap.

As you can see these stocks had an average of 32 hedge funds with bullish positions and the average amount invested in these stocks was $1.35 billion. SunTrust Banks, Inc. (NYSE:STI) is the most popular stock in this table, while Sun Life Financial Inc. (USA) (NYSE:SLF) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Charter Communications, Inc. (NASDAQ:CHTR) is more popular among hedge funds. Moreover, hedge funds have amassed $11.26 billion worth of its stock at the end of September. 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.