Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Altice USA, Inc. (NYSE:ATUS) in this article.
Is ATUS a good stock to buy now? Altice USA, Inc. (NYSE:ATUS) investors should be aware of an increase in support from the world’s most elite money managers of late. Altice USA, Inc. (NYSE:ATUS) was in 62 hedge funds’ portfolios at the end of September. The all time high for this statistics is 57. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that ATUS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 S&P 500 ETFs by 66 percentage points since March 2017 (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.
Bruce Kovner of Caxton Associates LP
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind we’re going to analyze the key hedge fund action surrounding Altice USA, Inc. (NYSE:ATUS).
How have hedgies been trading Altice USA, Inc. (NYSE:ATUS)?
At Q3’s end, a total of 62 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 9% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ATUS over the last 21 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Soroban Capital Partners was the largest shareholder of Altice USA, Inc. (NYSE:ATUS), with a stake worth $780 million reported as of the end of September. Trailing Soroban Capital Partners was Palestra Capital Management, which amassed a stake valued at $283.9 million. Zimmer Partners, Citadel Investment Group, and Pelham Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Simcoe Capital Management allocated the biggest weight to Altice USA, Inc. (NYSE:ATUS), around 23.3% of its 13F portfolio. Pelham Capital is also relatively very bullish on the stock, dishing out 16.88 percent of its 13F equity portfolio to ATUS.
As aggregate interest increased, specific money managers were breaking ground themselves. Holocene Advisors, managed by Brandon Haley, initiated the largest position in Altice USA, Inc. (NYSE:ATUS). Holocene Advisors had $66.8 million invested in the company at the end of the quarter. Eric Bannasch’s Cadian Capital also made a $45.5 million investment in the stock during the quarter. The other funds with brand new ATUS positions are Alexander Mitchell’s Scopus Asset Management, Phill Gross and Robert Atchinson’s Adage Capital Management, and Bruce Kovner’s Caxton Associates LP.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Altice USA, Inc. (NYSE:ATUS) but similarly valued. We will take a look at Steris Plc (NYSE:STE), Ingersoll Rand Inc. (NYSE:IR), SK Telecom Co., Ltd. (NYSE:SKM), Qorvo Inc (NASDAQ:QRVO), Warner Music Group Corp. (NASDAQ:WMG), Martin Marietta Materials, Inc. (NYSE:MLM), and Campbell Soup Company (NYSE:CPB). All of these stocks’ market caps resemble ATUS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| STE | 30 | 676397 | -10 |
| IR | 26 | 758110 | -5 |
| SKM | 4 | 111261 | -4 |
| QRVO | 51 | 1668362 | 0 |
| WMG | 20 | 662192 | -11 |
| MLM | 38 | 1934050 | -13 |
| CPB | 28 | 533547 | -4 |
| Average | 28.1 | 906274 | -6.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.1 hedge funds with bullish positions and the average amount invested in these stocks was $906 million. That figure was $3526 million in ATUS’s case. Qorvo Inc (NASDAQ:QRVO) is the most popular stock in this table. On the other hand SK Telecom Co., Ltd. (NYSE:SKM) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Altice USA, Inc. (NYSE:ATUS) is more popular among hedge funds. Our overall hedge fund sentiment score for ATUS is 90. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks returned 31.6% in 2020 through December 2nd but still managed to beat the market by 16 percentage points. Hedge funds were also right about betting on ATUS as the stock returned 33.2% since the end of September (through 12/2) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Follow Altice Usa Inc. (NYSE:ATUS)
Follow Altice Usa Inc. (NYSE:ATUS)
Disclosure: None. This article was originally published at Insider Monkey.
