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Hedge Funds Are Selling Altice USA, Inc. (ATUS)

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We at Insider Monkey have gone over 866 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st. In this article, we look at what those funds think of Altice USA, Inc. (NYSE:ATUS) based on that data.

Is Altice USA, Inc. (NYSE:ATUS) a bargain? Investors who are in the know were getting less optimistic. The number of bullish hedge fund positions fell by 8 lately. Altice USA, Inc. (NYSE:ATUS) was in 48 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 62. Our calculations also showed that ATUS isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 56 hedge funds in our database with ATUS holdings at the end of December.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

John Armitage Egerton Capital
John Armitage Egerton Capital

John Armitage of Egerton Capital

At Insider Monkey we leave no stone unturned when looking for 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, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. 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 homepage. Now we're going to take a peek at the latest hedge fund action regarding Altice USA, Inc. (NYSE:ATUS).

Do Hedge Funds Think ATUS Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 48 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ATUS over the last 23 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

The largest stake in Altice USA, Inc. (NYSE:ATUS) was held by Soroban Capital Partners, which reported holding $1008.4 million worth of stock at the end of December. It was followed by Pelham Capital with a $262.5 million position. Other investors bullish on the company included Palestra Capital Management, Zimmer Partners, and Egerton Capital Limited. In terms of the portfolio weights assigned to each position Simcoe Capital Management allocated the biggest weight to Altice USA, Inc. (NYSE:ATUS), around 17.99% of its 13F portfolio. Pelham Capital is also relatively very bullish on the stock, dishing out 16.29 percent of its 13F equity portfolio to ATUS.

Due to the fact that Altice USA, Inc. (NYSE:ATUS) has faced falling interest from the smart money, it's easy to see that there lies a certain "tier" of hedgies who sold off their entire stakes heading into Q2. At the top of the heap, David Fiszel's Honeycomb Asset Management sold off the largest stake of the "upper crust" of funds watched by Insider Monkey, worth close to $50.1 million in stock. Ike Kier and Ilya Zaides's fund, KG Funds Management, also said goodbye to its stock, about $44.6 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 8 funds heading into Q2.

Let's now take a look at hedge fund activity in other stocks similar to Altice USA, Inc. (NYSE:ATUS). We will take a look at Guardant Health, Inc. (NASDAQ:GH), American Airlines Group Inc (NASDAQ:AAL), Teledyne Technologies Incorporated (NYSE:TDY), GoodRx Holdings, Inc. (NASDAQ:GDRX), Avery Dennison Corporation (NYSE:AVY), Campbell Soup Company (NYSE:CPB), and PagSeguro Digital Ltd. (NYSE:PAGS). All of these stocks' market caps are similar to ATUS's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GH,41,1747051,-11 AAL,32,561701,-5 TDY,31,827471,3 GDRX,24,488114,-8 AVY,20,300350,-3 CPB,28,345398,-1 PAGS,33,1804603,8 Average,29.9,867813,-2.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 29.9 hedge funds with bullish positions and the average amount invested in these stocks was $868 million. That figure was $3599 million in ATUS's case. Guardant Health, Inc. (NASDAQ:GH) is the most popular stock in this table. On the other hand Avery Dennison Corporation (NYSE:AVY) is the least popular one with only 20 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 70.2. 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 17.4% in 2021 through June 18th and still beat the market by 6.1 percentage points. Unfortunately ATUS wasn't nearly as popular as these 5 stocks and hedge funds that were betting on ATUS were disappointed as the stock returned 3.7% since the end of the first quarter (through 6/18) 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 most of these stocks already outperformed the market since 2019.

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