T-Mobile US, Inc. (NYSE:TMUS) ranks 14th among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). There were 65 hedge funds in our database with TMUS positions at the end of the first quarter. The number of bullish hedge fund positions jumped by 48 recently. T-Mobile US, Inc. (NYSE:TMUS) was in 113 hedge funds' portfolios at the end of June. The all time high for this statistics was 80 before this. Later in this article, we will compare T-Mobile against similarly valued stocks like Sanofi (NYSE:SNY), Broadcom Inc (NASDAQ:AVGO), and BHP Group (NYSE:BHP). 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than quadrupled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar lithium stock. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 to get excerpts of these letters in your inbox. Keeping this in mind let's view the recent hedge fund action encompassing T-Mobile US, Inc. (NYSE:TMUS).
What does smart money think about T-Mobile US, Inc. (NYSE:TMUS)?
At the end of the second quarter, a total of 113 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 74% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards TMUS over the last 20 quarters. With hedge funds' capital changing hands, there exists a select group of key hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
Among these funds, Citadel Investment Group held the most valuable stake in T-Mobile US, Inc. (NYSE:TMUS), which was worth $706.1 million at the end of the third quarter. On the second spot was Appaloosa Management LP which amassed $614.5 million worth of shares. Renaissance Technologies, Egerton Capital Limited, and Viking Global 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 Element Capital Management allocated the biggest weight to T-Mobile US, Inc. (NYSE:TMUS), around 26.15% of its 13F portfolio. Crake Asset Management is also relatively very bullish on the stock, earmarking 13.28 percent of its 13F equity portfolio to TMUS.
With a general bullishness amongst the heavyweights, some big names have jumped into T-Mobile US, Inc. (NYSE:TMUS) headfirst. Egerton Capital Limited, managed by John Armitage, established the most valuable position in T-Mobile US, Inc. (NYSE:TMUS). Egerton Capital Limited had $437.5 million invested in the company at the end of the quarter. Thomas Steyer (founder)'s Farallon Capital also initiated a $360.1 million position during the quarter. The other funds with new positions in the stock are Simon Sadler's Segantii Capital, Stanley Druckenmiller's Duquesne Capital, and Robert Pitts's Steadfast Capital Management.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as T-Mobile US, Inc. (NYSE:TMUS) but similarly valued. We will take a look at Sanofi (NYSE:SNY), Broadcom Inc (NASDAQ:AVGO), BHP Group (NYSE:BHP), Danaher Corporation (NYSE:DHR), Medtronic plc (NYSE:MDT), Royal Dutch Shell plc (NYSE:RDS), and NextEra Energy, Inc. (NYSE:NEE). This group of stocks' market values are closest to TMUS's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SNY,24,1220415,9 AVGO,59,2378523,9 BHP,16,761158,-2 DHR,76,4287603,13 MDT,58,2705363,-1 RDS,34,1164812,6 NEE,55,1943660,3 Average,46,2065933,5.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 46 hedge funds with bullish positions and the average amount invested in these stocks was $2066 million. That figure was $7158 million in TMUS's case. Danaher Corporation (NYSE:DHR) is the most popular stock in this table. On the other hand BHP Group (NYSE:BHP) is the least popular one with only 16 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 93.5. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 29.2% in 2020 through October 16th and still beat the market by 19.7 percentage points. Unfortunately TMUS wasn't nearly as popular as these 10 stocks and hedge funds that were betting on TMUS were slightly disappointed as the stock returned 10.4% since the end of the second quarter (through 10/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.