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Hedge Funds Are Selling AT&T Inc. (T)

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Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about AT&T Inc. (NYSE:T) in this article.

AT&T Inc. (NYSE:T) shareholders have witnessed a decrease in support from the world's most elite money managers recently. AT&T Inc. (NYSE:T) was in 66 hedge funds' portfolios at the end of September. The all time high for this statistic is 94. Our calculations also showed that T isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings).

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. Keeping this in mind we're going to take a glance at the new hedge fund action regarding AT&T Inc. (NYSE:T).

Dmitry Balyasny of Balyasny Asset Managemnet
Dmitry Balyasny of Balyasny Asset Managemnet

Dmitry Balyasny of Balyasny Asset Management

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

At Q3's end, a total of 66 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -3% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in T over the last 25 quarters. With hedgies' capital changing hands, there exists a select group of key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

Among these funds, Citadel Investment Group held the most valuable stake in AT&T Inc. (NYSE:T), which was worth $939.6 million at the end of the third quarter. On the second spot was Millennium Management which amassed $484.4 million worth of shares. Two Sigma Advisors, Citadel Investment Group, and Millennium Management 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 Kamunting Street Capital allocated the biggest weight to AT&T Inc. (NYSE:T), around 8.08% of its 13F portfolio. Kettle Hill Capital Management is also relatively very bullish on the stock, earmarking 4.12 percent of its 13F equity portfolio to T.

Seeing as AT&T Inc. (NYSE:T) has faced falling interest from the aggregate hedge fund industry, it's easy to see that there exists a select few money managers who sold off their full holdings last quarter. At the top of the heap, Benjamin A. Smith's Laurion Capital Management cut the biggest investment of the "upper crust" of funds tracked by Insider Monkey, comprising an estimated $68.1 million in stock. Stuart J. Zimmer's fund, Zimmer Partners, also said goodbye to its stock, about $21.6 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 2 funds last quarter.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as AT&T Inc. (NYSE:T) but similarly valued. These stocks are AbbVie Inc (NYSE:ABBV), Wells Fargo & Company (NYSE:WFC), Merck & Co., Inc. (NYSE:MRK), AstraZeneca plc (NYSE:AZN), Novartis AG (NYSE:NVS), McDonald's Corporation (NYSE:MCD), and Morgan Stanley (NYSE:MS). This group of stocks' market values are similar to T's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ABBV,81,4140050,-1 WFC,88,6188279,-6 MRK,77,4550626,-2 AZN,41,3757394,4 NVS,22,1439973,0 MCD,58,3339098,-8 MS,65,4990950,-4 Average,61.7,4058053,-2.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 61.7 hedge funds with bullish positions and the average amount invested in these stocks was $4058 million. That figure was $3212 million in T's case. Wells Fargo & Company (NYSE:WFC) is the most popular stock in this table. On the other hand Novartis AG (NYSE:NVS) is the least popular one with only 22 bullish hedge fund positions. AT&T Inc. (NYSE:T) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for T is 57.4. 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. 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 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately T wasn't nearly as popular as these 5 stocks and hedge funds that were betting on T were disappointed as the stock returned -13.8% since the end of September (through 11/30) 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 many of these stocks already outperformed the market since 2019.

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