We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards T-Mobile US, Inc. (NYSE:TMUS) and determine whether hedge funds skillfully traded this stock.
Is T-Mobile US, Inc. (NYSE:TMUS) ready to rally soon? Investors who are in the know were cutting their exposure. The number of long hedge fund bets fell by 11 in recent months. T-Mobile US, Inc. (NYSE:TMUS) was in 89 hedge funds’ portfolios at the end of September. The all time high for this statistic is 113. Our calculations also showed that TMUS ranked 25th among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Daniel Sundheim of D1 Capital Partners
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind let’s review the fresh hedge fund action regarding T-Mobile US, Inc. (NYSE:TMUS).
Do Hedge Funds Think TMUS Is A Good Stock To Buy Now?
At third quarter’s end, a total of 89 of the hedge funds tracked by Insider Monkey were long this stock, a change of -11% from the previous quarter. On the other hand, there were a total of 94 hedge funds with a bullish position in TMUS a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Viking Global held the most valuable stake in T-Mobile US, Inc. (NYSE:TMUS), which was worth $1306.4 million at the end of the third quarter. On the second spot was Berkshire Hathaway which amassed $669.7 million worth of shares. D1 Capital Partners, Farallon Capital, and Appaloosa Management LP 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 BlueDrive Global Investors allocated the biggest weight to T-Mobile US, Inc. (NYSE:TMUS), around 19.37% of its 13F portfolio. RIT Capital Partners is also relatively very bullish on the stock, setting aside 14.13 percent of its 13F equity portfolio to TMUS.
Because T-Mobile US, Inc. (NYSE:TMUS) has witnessed bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of hedge funds who sold off their entire stakes heading into Q4. At the top of the heap, Josh Resnick’s Jericho Capital Asset Management said goodbye to the largest stake of all the hedgies tracked by Insider Monkey, totaling about $84 million in stock. Ike Kier and Ilya Zaides’s fund, KG Funds Management, also cut its stock, about $68.7 million worth. These moves are important to note, as total hedge fund interest dropped by 11 funds heading into Q4.
Let’s now review hedge fund activity in other stocks similar to T-Mobile US, Inc. (NYSE:TMUS). We will take a look at SAP SE (NYSE:SAP), United Parcel Service, Inc. (NYSE:UPS), Moderna, Inc. (NASDAQ:MRNA), NextEra Energy, Inc. (NYSE:NEE), Linde plc (NYSE:LIN), Charter Communications, Inc. (NASDAQ:CHTR), and Philip Morris International Inc. (NYSE:PM). This group of stocks’ market values are closest to TMUS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SAP | 15 | 1529829 | -2 |
| UPS | 42 | 1266269 | -10 |
| MRNA | 49 | 7315014 | 12 |
| NEE | 53 | 2374429 | -6 |
| LIN | 46 | 4769164 | -9 |
| CHTR | 74 | 18794064 | -1 |
| PM | 48 | 5924682 | 2 |
| Average | 46.7 | 5996207 | -2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 46.7 hedge funds with bullish positions and the average amount invested in these stocks was $5996 million. That figure was $6929 million in TMUS’s case. Charter Communications, Inc. (NASDAQ:CHTR) is the most popular stock in this table. On the other hand SAP SE (NYSE:SAP) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks T-Mobile US, Inc. (NYSE:TMUS) is more popular among hedge funds. Our overall hedge fund sentiment score for TMUS is 67.6. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. Unfortunately, TMUS wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on TMUS were disappointed as the stock returned -15.3% since the end of the third quarter (through 1/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as all of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
