What happened
It's rarely comforting when an institutional investor cuts its stake in a company. That seemed to be the main catalyst behind Lumen Technologies' (LUMN -0.76%) 4.2% share price decline on Monday. By contrast, the somewhat sickly S&P 500 index endured a drop of only 0.6% that day.
So what
In a regulatory document filed that morning, financial services company State Street disclosed that it currently holds just under 53.9 million shares of Lumen's common stock, giving it a stake of slightly over 5.2% in the telecom.
That represents a 12% drop from what State Street held at nearly the same time last year. In its most recent regulatory filing regarding the stake, dated Feb. 14, 2022, it was in possession of almost 61.5 million shares. At the time, that represented a holding of a bit more than 6%.
The admission came in a 13G/A filing, which is a purely informational document that does not include any explanation or justification for stock divestments or additions. State Street has not yet publicly commented on its shift, nor has Lumen formally addressed it.
Now what
State Street isn't the only investor that's sold out of Lumen to some degree. The struggling telecom was hardly a popular company in 2022, with its share price cratering by almost 60%. The telecom and tech sectors were already vulnerable due to a number of factors, such as supply chain difficulties and rising interest rates. Lumen compounded this by suspending its high-yield dividend late in the year. It has not recovered since.
Yet Lumen as a company still has quite a few strengths; its cash flow is still robust and is now freed from that fairly burdensome dividend, plus management has been slimming down its business of late. It's certainly a stock worth watching, particularly for bargain hunters. It reports fourth-quarter earnings after market close on Tuesday.
