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Were Hedge Funds Right About Betting On T-Mobile US (TMUS)?

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Debasis Saha
·5 min read
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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 887 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of December 31st. In this article we look at what those investors think of T-Mobile US, Inc. (NYSE:TMUS).

Is T-Mobile US, Inc. (NYSE:TMUS) going to take off soon? Investors who are in the know were turning bullish. The number of bullish hedge fund bets went up by 9 in recent months. T-Mobile US, Inc. (NYSE:TMUS) was in 103 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 113. Our calculations also showed that TMUS ranked #20 among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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 website. With all of this in mind we're going to go over the recent hedge fund action encompassing T-Mobile US, Inc. (NYSE:TMUS).

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

At Q4's end, a total of 103 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards TMUS over the last 22 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is TMUS A Good Stock To Buy?
Is TMUS A Good Stock To Buy?

Among these funds, Viking Global held the most valuable stake in T-Mobile US, Inc. (NYSE:TMUS), which was worth $1173.9 million at the end of the fourth quarter. On the second spot was Egerton Capital Limited which amassed $1002 million worth of shares. Berkshire Hathaway, Appaloosa Management LP, and Citadel Investment Group 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 BlueDrive Global Investors allocated the biggest weight to T-Mobile US, Inc. (NYSE:TMUS), around 16.57% of its 13F portfolio. Fernbridge Capital Management is also relatively very bullish on the stock, designating 15.62 percent of its 13F equity portfolio to TMUS.

With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Fernbridge Capital Management, managed by Brennan Diaz, established the most valuable position in T-Mobile US, Inc. (NYSE:TMUS). Fernbridge Capital Management had $94.1 million invested in the company at the end of the quarter. Gaurav Kapadia's XN Exponent Advisors also initiated a $39 million position during the quarter. The other funds with new positions in the stock are John Brennan's Sirios Capital Management, Felix Wai's Zeno Research, and Kevin Cottrell and Chris LaSusa's KCL Capital.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as T-Mobile US, Inc. (NYSE:TMUS) but similarly valued. These stocks are Costco Wholesale Corporation (NASDAQ:COST), BHP Group (NYSE:BHP), Novo Nordisk A/S (NYSE:NVO), Chevron Corporation (NYSE:CVX), Eli Lilly and Company (NYSE:LLY), McDonald's Corporation (NYSE:MCD), and The Unilever Group (NYSE:UL). This group of stocks' market valuations match TMUS's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position COST,61,3613961,-12 BHP,20,1099946,2 NVO,23,3161939,1 CVX,50,5390278,7 LLY,50,3028302,-10 MCD,62,2889876,-3 UL,25,1172892,12 Average,41.6,2908171,-0.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 41.6 hedge funds with bullish positions and the average amount invested in these stocks was $2908 million. That figure was $9117 million in TMUS's case. McDonald's Corporation (NYSE:MCD) is the most popular stock in this table. On the other hand BHP Group (NYSE:BHP) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks T-Mobile US, Inc. (NYSE:TMUS) is more popular among hedge funds. Our overall hedge fund sentiment score for TMUS is 87.8. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Unfortunately TMUS wasn't nearly as successful as these 30 stocks and hedge funds that were betting on TMUS were disappointed as the stock returned -2.1% since the end of the fourth quarter (through 4/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the more diversified list of the top 30 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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