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Is Charter Communications, Inc. (CHTR) A Good Stock To Buy ?

Debasis Saha

Coronavirus is probably the #1 concern in investors' minds right now. It should be. We estimate that COVID-19 will kill around 5 million people worldwide and there is a 3.3% probability that Donald Trump will die from the new coronavirus (read the details). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 835 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their December 31 holdings, data that is available nowhere else. Should you consider Charter Communications, Inc. (NASDAQ:CHTR) for your portfolio? We'll look to this invaluable collective wisdom for the answer.

Charter Communications, Inc. (NASDAQ:CHTR) shareholders have witnessed a decrease in activity from the world's largest hedge funds in recent months. Our calculations also showed that CHTR isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

In the financial world there are many signals investors can use to assess stocks. A pair of the most useful signals are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the best investment managers can outclass the broader indices by a solid margin (see the details here).

[caption id="attachment_315178" align="aligncenter" width="600"] Warren Buffett of Berkshire Hathaway[/caption]

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. In January, we recommended a long position in one of the most shorted stocks in the market, and that stock returned more than 50% despite the large losses in the market since our recommendation. With all of this in mind let's take a glance at the key hedge fund action regarding Charter Communications, Inc. (NASDAQ:CHTR).

What have hedge funds been doing with Charter Communications, Inc. (NASDAQ:CHTR)?

At Q4's end, a total of 65 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from one quarter earlier. By comparison, 64 hedge funds held shares or bullish call options in CHTR a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

Is CHTR A Good Stock To Buy?

More specifically, Berkshire Hathaway was the largest shareholder of Charter Communications, Inc. (NASDAQ:CHTR), with a stake worth $2632.3 million reported as of the end of September. Trailing Berkshire Hathaway was Egerton Capital Limited, which amassed a stake valued at $1117.8 million. AltaRock Partners, First Pacific Advisors LLC, and Farallon 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 Hengistbury Investment Partners allocated the biggest weight to Charter Communications, Inc. (NASDAQ:CHTR), around 34.6% of its 13F portfolio. AltaRock Partners is also relatively very bullish on the stock, designating 32.45 percent of its 13F equity portfolio to CHTR.

Due to the fact that Charter Communications, Inc. (NASDAQ:CHTR) has faced falling interest from hedge fund managers, it's easy to see that there were a few hedgies that decided to sell off their positions entirely last quarter. Interestingly, Doug Silverman and Alexander Klabin's Senator Investment Group cut the largest investment of the "upper crust" of funds watched by Insider Monkey, totaling about $138.1 million in stock, and David Harding's Winton Capital Management was right behind this move, as the fund said goodbye to about $65.9 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 5 funds last quarter.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Charter Communications, Inc. (NASDAQ:CHTR) but similarly valued. These stocks are Starbucks Corporation (NASDAQ:SBUX), Diageo plc (NYSE:DEO), Toronto-Dominion Bank (NYSE:TD), and American Express Company (NYSE:AXP). This group of stocks' market caps are closest to CHTR's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SBUX,66,5063838,7 DEO,17,794917,-5 TD,17,312660,0 AXP,58,22554070,3 Average,39.5,7181371,1.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 39.5 hedge funds with bullish positions and the average amount invested in these stocks was $7181 million. That figure was $9014 million in CHTR's case. Starbucks Corporation (NASDAQ:SBUX) is the most popular stock in this table. On the other hand Diageo plc (NYSE:DEO) is the least popular one with only 17 bullish hedge fund positions. Charter Communications, Inc. (NASDAQ:CHTR) is not the most popular stock in this group but hedge fund interest is still above average. 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 10.1 percentage points. These stocks also gained 0.1% in 2020 through March 2nd and beat the market by 4.1 percentage points. Hedge funds were also right about betting on CHTR as the stock returned 2.5% during the first quarter (through March 2nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Disclosure: None. This article was originally published at Insider Monkey.

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