Legendary investors such as Jeffrey Talpins and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don't publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That's why we analyze the activity of those elite funds in these small-cap stocks. In the following paragraphs, we analyze TELUS Corporation (NYSE:TU) from the perspective of those elite funds.
Hedge fund interest in TELUS Corporation (NYSE:TU) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Interactive Brokers Group, Inc. (NASDAQ:IBKR), Discovery Inc. (NASDAQ:DISCA), and PPL Corporation (NYSE:PPL) to gather more data points.
To most traders, hedge funds are perceived as worthless, old investment vehicles of the past. While there are more than 8000 funds trading at the moment, We choose to focus on the upper echelon of this group, approximately 750 funds. These investment experts oversee most of all hedge funds' total asset base, and by shadowing their inimitable equity investments, Insider Monkey has deciphered several investment strategies that have historically surpassed the broader indices. Insider Monkey's flagship hedge fund strategy defeated the S&P 500 index by around 5 percentage points per annum since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to check out the key hedge fund action surrounding TELUS Corporation (NYSE:TU).
How have hedgies been trading TELUS Corporation (NYSE:TU)?
At Q2's end, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the first quarter of 2019. The graph below displays the number of hedge funds with bullish position in TU over the last 16 quarters. With the smart money's sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
The largest stake in TELUS Corporation (NYSE:TU) was held by Renaissance Technologies, which reported holding $199.3 million worth of stock at the end of March. It was followed by GLG Partners with a $46.8 million position. Other investors bullish on the company included Arrowstreet Capital, D E Shaw, and Two Sigma Advisors.
Since TELUS Corporation (NYSE:TU) has faced declining sentiment from the entirety of the hedge funds we track, we can see that there exists a select few fund managers that slashed their entire stakes by the end of the second quarter. At the top of the heap, David Costen Haley's HBK Investments said goodbye to the largest investment of the "upper crust" of funds followed by Insider Monkey, comprising about $0.3 million in call options, and Ken Griffin's Citadel Investment Group was right behind this move, as the fund sold off about $0.3 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as TELUS Corporation (NYSE:TU) but similarly valued. We will take a look at Interactive Brokers Group, Inc. (NASDAQ:IBKR), Discovery Inc. (NASDAQ:DISCA), PPL Corporation (NYSE:PPL), and Stanley Black & Decker, Inc. (NYSE:SWK). All of these stocks' market caps are closest to TU's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IBKR,24,1002716,1 DISCA,24,335380,-2 PPL,20,857968,-2 SWK,27,1068040,-4 Average,23.75,816026,-1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.75 hedge funds with bullish positions and the average amount invested in these stocks was $816 million. That figure was $328 million in TU's case. Stanley Black & Decker, Inc. (NYSE:SWK) is the most popular stock in this table. On the other hand PPL Corporation (NYSE:PPL) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks TELUS Corporation (NYSE:TU) is even less popular than PPL. Hedge funds dodged a bullet by taking a bearish stance towards TU. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately TU wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); TU investors were disappointed as the stock returned -2.4% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks (see the video below) among hedge funds as many of these stocks already outperformed the market so far in 2019. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.