What do the world's largest money managers like in the wireless services group? Through research of the latest available Q4 institutional 13-F filings, we identify the wireless services stocks, including domestic and foreign carriers, that are being accumulated and those being distributed by the world's largest fund managers, managing between $50 billion and over $700 billion in 13-F assets. Taken together, these mega fund managers control over 35% of the assets invested in the U.S. equity markets, but number just over 30 out of the tens of thousands of funds that invest in the U.S. equity markets. Also, taken together, they are bearish on the wireless services group, cumulatively cutting $1.95 billion in Q4 from their $50.50 billion prior quarter position (for more general information on these mega funds, please look at the end of the article).
The following are the wireless services stocks that these mega fund managers are most bullish about, that are also undervalued compared to the peers in their group, and also have a high dividend yield relative to their peers (see Table):
SK Telecom Co Ltd. ADS (SKM): SKM is a South Korean provider of digital wireless voice and data services, using CDMA and wide-band CDMA technologies. Mega funds together added a net $149 million in Q4 to their $312 million prior quarter position in the company. Taken together mega funds hold 5.3% of the outstanding shares. The top buyer was Bank of America, with $169 billion in 13-F assets ($103 million), and the top holders were Bank of America ($103 million) and New York-based Bank of New York Mellon Corp., with over $1.2 trillion in assets under management ($74 million).
SKM shares, approximately flat YTD, are trading within striking range of multi-year lows after being down by almost 30% in 2011. Its shares currently trade at 6.3 forward P/E and 0.8 P/B compared to averages of 10.9 and 3.2 for its peers in the non-U.S. wireless group, and it has a dividend yield of 5.2% compared to the 2.3% average for the group.
Mobile Telesystems ADR (MBT): MBT is a Russian provider of digital wireless voice and data services to over 100 million subscribers in the Russian Federation, Ukraine, Uzbekistan, Armenia and Belarus. Mega funds together added a net $76 million in Q4 to their $2.52 billion prior quarter position in the company. Taken together, mega funds hold 13.9% of the outstanding shares. The top buyer was Los Angeles-based Capital Research Global Investors, with over $223 billion in 13-F assets ($79 million), also the top holder at $1.02 billion.
MBT shares are up about 31% YTD, and is currently trading at 9-10 forward P/E and 5.3 P/B compared to averages of 10.9 and 3.2 for its peers in the non-U.S. wireless group. MBT has a dividend yield of 5.6% compared to the 2.3% average for the group.
The following are some additional wireless services stocks that mega funds accumulated in Q4 (see Table):
SBA Communications Corp. (SBAC), that operates cellular towers in the U.S. and provides leasing services to wireless service providers, in which mega funds together added a net $1.51 billion in Q4 to their $2.00 billion prior quarter position in the company.
NII Holdings Inc. (NIHD), that provides wireless communications services under the Nextel brand name to businesses and individuals in Mexico, Brazil, Argentina, Peru, and Chile, in which mega funds together added a net $79 million in Q4 to their $812 million prior quarter position in the company.
Broadband wireless network services provider Clearwire Corp. (CLWR), in which mega funds together added a net $51 million in Q4 to their $74 million prior quarter position in the company.
Besides these, mega funds based on their Q4 trading activity indicated that they are bearish on the following wireless services stocks (see Table):
- Vodafone Group Plc (VOD) is a U.K.-based provider of digital wireless voice and data services, and the world's largest international mobile communications company offering its services to over 350 million customers in over 40 countries. Mega funds together cut a net $1.12 billion in Q4 from their $7.45 billion prior quarter position in the company.
- America Movil SAB (AMX) is a leading Mexican provider of wireless, fixed line voice, broadband, pay TV, and directory products and services to subscribers in over 18 countries in North and South America. Mega funds together cut a net $458 million in Q4 from their $10.89 billion prior quarter position in the company.
- Turkcell Iletisim Hizmetleri AS (TKC) is a leading Turkish provider of digital wireless voice and data services to over 33 million subscribers in Turkey, Ukraine, Cyprus and Belarus. Mega funds together cut a net $178 million in Q4 from their $576 million prior quarter position in the company.
- Sprint Nextel Corp. (S) offers wireless and wireline communications products and services to individual consumers, businesses, government subscribers and resellers in the United States, Puerto Rico and the U.S. Virgin Islands. Mega funds together cut a net $73 million in Q4 from their $3.63 billion prior quarter position in the company.
- MetroPCS Communications Inc. (PCS) is a wireless telecommunications carrier, offering wireless broadband mobile services in the United States. Mega funds together cut a net $66 million in Q4 from their $923 million prior quarter position in the company.
General Methodology and Background Information: The latest available institutional 13-F filings of over 30+ mega hedge fund and mutual fund managers were analyzed to determine their capital allocation among different industry groupings, and to determine their favorite picks and pans in each group. These mega fund managers number less than one percent of all funds and yet they control almost half of the U.S. equity discretionary fund assets. The argument is that mega institutional investors have the resources and the access to information, knowledge and expertise to conduct extensive due diligence in informing their investment decisions. When mega Institutional Investors invest and maybe even converge on a specific investment idea, the idea deserves consideration for further investigation. The savvy investor may then leverage this information either as a starting point to conduct his own due diligence.
This article is part of a series on institutional holdings in various industry groups and sectors, and other articles in the series for this and prior quarters can be accessed from our author page.
Credit: Fundamental data in this article were based on SEC filings, Zacks Investment Research, Thomson Reuters and Briefing.com. The information and data is believed to be accurate, but no guarantees or representations are made.
Disclaimer: Material presented here is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. Further, these are our 'opinions' and we may be wrong. We may have positions in securities mentioned in this article. You should take this into consideration before acting on any advice given in this article. If this makes you uncomfortable, then do not listen to our thoughts and opinions. The contents of this article do not take into consideration your individual investment objectives so consult with your own financial adviser before making an investment decision. Investing includes certain risks including loss of principal.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.