World-class money managers like Ken Griffin and Barry Rosenstein only invest their wealthy clients' money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It's not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It's also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.
At the moment there are a large number of gauges investors employ to analyze publicly traded companies. A couple of the less known gauges are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the top picks of the elite hedge fund managers can beat the broader indices by a solid amount (see the details here).
We're going to take a peek at the key hedge fund action surrounding Telephone & Data Systems, Inc. (NYSE:TDS).
What have hedge funds been doing with Telephone & Data Systems, Inc. (NYSE:TDS)?
Heading into the fourth quarter of 2018, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from the second quarter of 2018. On the other hand, there were a total of 16 hedge funds with a bullish position in TDS at the beginning of this year. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Telephone & Data Systems, Inc. (NYSE:TDS), with a stake worth $105.6 million reported as of the end of September. Trailing Renaissance Technologies was GAMCO Investors, which amassed a stake valued at $80.5 million. Millennium Management, GLG Partners, and NWI Management were also very fond of the stock, giving the stock large weights in their portfolios.
Judging by the fact that Telephone & Data Systems, Inc. (NYSE:TDS) has faced bearish sentiment from the entirety of the hedge funds we track, we can see that there was a specific group of hedge funds who sold off their entire stakes last quarter. At the top of the heap, Benjamin A. Smith's Laurion Capital Management dumped the biggest stake of the 700 funds monitored by Insider Monkey, totaling an estimated $1.7 million in stock. Dmitry Balyasny's fund, Balyasny Asset Management, also dropped its stock, about $1.1 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell 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 Telephone & Data Systems, Inc. (NYSE:TDS) but similarly valued. We will take a look at Syntel, Inc. (NASDAQ:SYNT), Box, Inc. (NYSE:BOX), Chimera Investment Corporation (NYSE:CIM), and Domtar Corporation (NYSE:UFS). This group of stocks' market valuations are closest to TDS's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SYNT,18,179383,-2 BOX,26,455631,-1 CIM,12,17383,2 UFS,22,231716,-3 Average,19.5,221028,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $221 million. That figure was $330 million in TDS's case. Box, Inc. (NYSE:BOX) is the most popular stock in this table. On the other hand Chimera Investment Corporation (NYSE:CIM) is the least popular one with only 12 bullish hedge fund positions. Telephone & Data Systems, Inc. (NYSE:TDS) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. In this regard BOX might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.