Hedge Funds

Hedge fund manager Todd Westhus recommends betting against AT&T bonds

Key Points
  • Olympic Peak’s Todd Westhus recommends shorting AT&T bonds.
  • AT&T “has a ton of debt,” he says. “This is a very mature business. Revenues have been declining.”
Todd Westhus

Olympic Peak's Todd Westhus says AT&T bonds are overvalued.

AT&T "has a ton of debt," he said Wednesday on CNBC's "Squawk Box." "This is a very mature business. Revenues have been declining."

He recommends shorting the company's bonds.

Shorting is a trading strategy that involves selling a borrowed asset with a view that it will drop in value and the asset can be bought back later at a lower price.

In his presentation for the Sohn Tel Aviv conference Wednesday, Westhus said AT&T added $125 billion in additional debt to its balance sheet since 2007. He noted that the wireless business is facing more competition and has deteriorating growth trends.

Westhus is the founding partner and chief investment officer of Olympic Peak. Prior to this role, he was managing partner at Perry Capital, where he worked for 11 years.

Sohn is series of widely anticipated hedge fund conferences, where managers volunteer their time and best investment ideas to raise money in the fight against childhood cancer.

When asked for comment, an AT&T spokesperson said the company expects "to return to historical debt levels by the end of 2022." The person added AT&T will continue to use its cashflow after dividends to pay down its corporate debt.