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Was The Smart Money Right About Altice USA, Inc. (ATUS)?

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  • ATUS

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31st, so let’s proceed with the discussion of the hedge fund sentiment on Altice USA, Inc. (NYSE:ATUS).

Altice USA, Inc. (NYSE:ATUS) was in 56 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 62. ATUS investors should pay attention to a decrease in hedge fund interest recently. There were 62 hedge funds in our database with ATUS holdings at the end of September. Our calculations also showed that ATUS isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).

In the financial world there are numerous signals shareholders can use to assess their holdings. Two of the most useful signals are hedge fund and insider trading activity. We have shown that, historically, those who follow the best picks of the top hedge fund managers can outpace the broader indices by a significant margin (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 197% since March 2017 (through March 2021) and beat the S&P 500 Index by 124 percentage points. You can download a sample issue of this newsletter on our website .

Stuart Zimmer Zimmer Partners
Stuart Zimmer Zimmer Partners

Stuart Zimmer of Zimmer Partners

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell 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. 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 let's take a glance at the new hedge fund action surrounding Altice USA, Inc. (NYSE:ATUS).

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

Heading into the first quarter of 2021, a total of 56 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -10% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ATUS over the last 22 quarters. 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 Altice USA, Inc. (NYSE:ATUS) was held by Soroban Capital Partners, which reported holding $1174 million worth of stock at the end of December. It was followed by Palestra Capital Management with a $331.8 million position. Other investors bullish on the company included Egerton Capital Limited, Pelham Capital, and Zimmer Partners. In terms of the portfolio weights assigned to each position Simcoe Capital Management allocated the biggest weight to Altice USA, Inc. (NYSE:ATUS), around 24.93% of its 13F portfolio. Pelham Capital is also relatively very bullish on the stock, earmarking 18.1 percent of its 13F equity portfolio to ATUS.

Because Altice USA, Inc. (NYSE:ATUS) has witnessed declining sentiment from the smart money, logic holds that there is a sect of fund managers that elected to cut their entire stakes by the end of the fourth quarter. At the top of the heap, Renaissance Technologies cut the biggest stake of the "upper crust" of funds monitored by Insider Monkey, valued at an estimated $121 million in stock. Robert Pohly's fund, Samlyn Capital, also dumped its stock, about $77.6 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 6 funds by the end of the fourth quarter.

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Altice USA, Inc. (NYSE:ATUS) but similarly valued. These stocks are CBRE Group, Inc. (NYSE:CBRE), West Pharmaceutical Services Inc. (NYSE:WST), United Microelectronics Corp (NYSE:UMC), Zebra Technologies Corporation (NASDAQ:ZBRA), CGI Inc. (NYSE:GIB), Canon Inc. (NYSE:CAJ), and Synchrony Financial (NYSE:SYF). This group of stocks' market valuations are similar to ATUS's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CBRE,31,2119045,7 WST,34,455821,-7 UMC,12,190662,1 ZBRA,41,910955,-3 GIB,15,128389,-5 CAJ,7,58073,0 SYF,50,2464559,4 Average,27.1,903929,-0.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.1 hedge funds with bullish positions and the average amount invested in these stocks was $904 million. That figure was $4476 million in ATUS's case. Synchrony Financial (NYSE:SYF) is the most popular stock in this table. On the other hand Canon Inc. (NYSE:CAJ) is the least popular one with only 7 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 76.1. 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 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and still beat the market by 1.6 percentage points. Unfortunately ATUS wasn't nearly as popular as these 10 stocks and hedge funds that were betting on ATUS were disappointed as the stock returned -4.1% since the end of the fourth quarter (through 4/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 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.

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