Were Hedge Funds Right About Charter Communications (CHTR)?
After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of December 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Charter Communications, Inc. (NASDAQ:CHTR).
Charter Communications, Inc. (NASDAQ:CHTR) has experienced an increase in hedge fund sentiment lately. Charter Communications, Inc. (NASDAQ:CHTR) was in 90 hedge funds' portfolios at the end of the fourth quarter of 2020. 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 Q4 rankings).
John Armitage of Egerton Capital
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here). At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now 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. Keeping this in mind we're going to view the latest hedge fund action regarding Charter Communications, Inc. (NASDAQ:CHTR).
Do Hedge Funds Think CHTR Is A Good Stock To Buy Now?
At the end of December, a total of 90 of the hedge funds tracked by Insider Monkey were long this stock, a change of 2% from the previous quarter. On the other hand, there were a total of 65 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.
More specifically, Berkshire Hathaway was the largest shareholder of Charter Communications, Inc. (NASDAQ:CHTR), with a stake worth $3449 million reported as of the end of December. Trailing Berkshire Hathaway was Egerton Capital Limited, which amassed a stake valued at $1144.3 million. BlueSpruce Investments, AltaRock Partners, and Third Point 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 Triple Frond Partners allocated the biggest weight to Charter Communications, Inc. (NASDAQ:CHTR), around 25.62% of its 13F portfolio. AltaRock Partners is also relatively very bullish on the stock, designating 24.81 percent of its 13F equity portfolio to CHTR.
With a general bullishness amongst the heavyweights, key hedge funds have jumped into Charter Communications, Inc. (NASDAQ:CHTR) headfirst. Anomaly Capital Management, managed by Ben Jacobs, created the most outsized position in Charter Communications, Inc. (NASDAQ:CHTR). Anomaly Capital Management had $29.4 million invested in the company at the end of the quarter. Joseph Samuels's Islet Management also made a $14.9 million investment in the stock during the quarter. The other funds with brand new CHTR positions are Clayton Gardner and Joe Percoco's Titan Global Capital, Joshua Pearl's Hickory Lane Capital Management, and Louis Bacon's Moore Global Investments.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Charter Communications, Inc. (NASDAQ:CHTR) but similarly valued. These stocks are AstraZeneca plc (NYSE:AZN), Philip Morris International Inc. (NYSE:PM), Citigroup Inc. (NYSE:C), Starbucks Corporation (NASDAQ:SBUX), Sony Corporation (NYSE:SNE), Wells Fargo & Company (NYSE:WFC), and Morgan Stanley (NYSE:MS). All of these stocks' market caps are similar to CHTR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AZN,41,2983928,8 PM,52,4426846,2 C,95,7120499,4 SBUX,67,4990840,1 SNE,28,593971,2 WFC,99,8748819,9 MS,66,5665191,-4 Average,64,4932871,3.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 64 hedge funds with bullish positions and the average amount invested in these stocks was $4933 million. That figure was $11275 million in CHTR's case. Wells Fargo & Company (NYSE:WFC) is the most popular stock in this table. On the other hand Sony Corporation (NYSE:SNE) is the least popular one with only 28 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 70.8. 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. 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 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 beat the market again by 0.9 percentage points. Unfortunately CHTR wasn't nearly as popular as these 30 stocks and hedge funds that were betting on CHTR were disappointed as the stock returned -2.6% since the end of December (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 top 30 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.
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