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Here is What Hedge Funds Think About Charter Communications, Inc. (CHTR)

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In this article we will analyze whether Charter Communications, Inc. (NASDAQ:CHTR) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

Is Charter Communications, Inc. (NASDAQ:CHTR) a healthy stock for your portfolio? Investors who are in the know were cutting their exposure. The number of bullish hedge fund positions fell by 1 in recent months. Charter Communications, Inc. (NASDAQ:CHTR) was in 74 hedge funds' portfolios at the end of the third quarter of 2021. The all time high for this statistic is 134. Our calculations also showed that CHTR 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. With all of this in mind we're going to analyze the latest hedge fund action surrounding Charter Communications, Inc. (NASDAQ:CHTR).

Chris Hohn's top 10 stock picks
Chris Hohn's top 10 stock picks

Chris Hohn of TCI Fund Management

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

Heading into the fourth quarter of 2021, a total of 74 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -1% from the second quarter of 2021. On the other hand, there were a total of 88 hedge funds with a bullish position in CHTR a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Charter Communications, Inc. (NASDAQ:CHTR) was held by TCI Fund Management, which reported holding $7536.9 million worth of stock at the end of September. It was followed by Berkshire Hathaway with a $3056.2 million position. Other investors bullish on the company included Egerton Capital Limited, GQG Partners, and AltaRock Partners. In terms of the portfolio weights assigned to each position Triple Frond Partners allocated the biggest weight to Charter Communications, Inc. (NASDAQ:CHTR), around 25.19% of its 13F portfolio. AltaRock Partners is also relatively very bullish on the stock, earmarking 23.35 percent of its 13F equity portfolio to CHTR.

Because Charter Communications, Inc. (NASDAQ:CHTR) has witnessed declining sentiment from the aggregate hedge fund industry, logic holds that there was a specific group of funds that slashed their full holdings last quarter. Intriguingly, Matthew Stadelman's Diamond Hill Capital cut the largest stake of the "upper crust" of funds tracked by Insider Monkey, worth an estimated $327.8 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital was right behind this move, as the fund cut about $114.2 million worth. These moves are interesting, as aggregate hedge fund interest fell by 1 funds last quarter.

Let's go over hedge fund activity in other stocks similar to Charter Communications, Inc. (NASDAQ:CHTR). We will take a look at Philip Morris International Inc. (NYSE:PM), Intuit Inc. (NASDAQ:INTU), Honeywell International Inc. (NASDAQ:HON), QUALCOMM, Incorporated (NASDAQ:QCOM), Citigroup Inc. (NYSE:C), Royal Bank of Canada (NYSE:RY), and Lowe's Companies, Inc. (NYSE:LOW). All of these 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 PM,48,5924682,2 INTU,64,6152464,-2 HON,45,927738,-12 QCOM,70,3519652,-2 C,79,5587345,-8 RY,16,1103417,-2 LOW,60,5080325,-3 Average,54.6,4042232,-3.9 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 54.6 hedge funds with bullish positions and the average amount invested in these stocks was $4042 million. That figure was $18794 million in CHTR's case. Citigroup Inc. (NYSE:C) is the most popular stock in this table. On the other hand Royal Bank of Canada (NYSE:RY) is the least popular one with only 16 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 overall hedge fund sentiment score for CHTR is 66.6. 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 CHTR wasn't nearly as popular as these 5 stocks and hedge funds that were betting on CHTR were disappointed as the stock returned -11.2% 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.