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Hedge Fund Interest in Verizon

Posted on December 31st, 2018

Verizon Communications Inc. (VZ) has put together a stellar 2018, rising over 4% versus the S&P 500, which has fallen 7%. The stock has even outperformed the broader index during the latest period of stock market volatility, with shares falling 9% from their highs versus the S&P 500, which has fallen 15%. The stock’s strong performance may be a result of investors seeking safety during volatile times, or it is because investors see significant growth opportunity ahead for the company.

Hedge Funds and institutions started to buy the wireless provider well before the recent stock market sell-off. During the third quarter, the stock’s ranking increased from 25 to 12 on the WhaleWisdom Heat Map.  Additionally, the buying activity helped the stock earn a place on the WhaleWisdom 100 Index in the middle of November.

Buying the Stock

Of the 150-hedge funds WhaleWisdom tracks for its heat map, 30 hold the stock in their portfolio. Meanwhile, during the third quarter, 13 funds increased their positions in the stock, while 10 lowered their holdings. Overall, institutions were neutral on the stock during the third quarter; total shares held among institutions increased by about 20 basis points, bringing the total 13F held to 2.68 billion. In total 112 institutions created new positions in the stock, while 65 closed them out. Meanwhile, 963 institutions added to their holdings, while 815 decreased them.



Investors appear to be looking to the launch of the fifth-generation of wireless technology, also known as 5G. The new technology will offer wireless users download speeds that are up to 20 times faster than the current 4G LTE network. Additionally, it promises to reduce downtime and delays, which may usher the use of more connected devices in the home and throughout businesses.

Pure Play

Verizon offers investors a pureplay on the new technology over rivals such as AT&T. Remember that AT&T owns assets such as the satellite TV provider Dish Networks and the recently acquired media company, Time Warner. Those assets created additional uncertainty for AT&T, especially given Dish’s loss of subscribers in recent quarters.

Where’s the Growth

Analysts do not anticipate much revenue growth for Verizon in 2019, as earnings are forecast to rise by 1% to $4.72 per share and estimate that revenue will rise by 1% to $132.3 billion. Currently, analyst estimate that earnings and revenue will grow about 1% in 2020. Future estimates appear to make the prospect for 5G uninspiring if they remain unchanged. It is worth noting that 5G technology is just beginning to roll out, and the adoption rate is likely to be slow as wireless devices are upgraded.

If 5G lives up to the promises for blazing fast download speeds and low latency, it is likely to be a boost for Verizon and its stock. It seems Hedge Funds are starting to place their bets in anticipation of this new technology.


This entry was posted on Monday, December 31st, 2018 at 9:04 am and is filed under 13F, Stock. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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