Is ADTRAN, Inc. (NASDAQ:ADTN) a superb investment now? Hedge funds are reducing their bets on the stock. The number of long hedge fund positions decreased by 6 in recent months.
To most traders, hedge funds are assumed to be worthless, outdated financial tools of yesteryear. While there are over 8000 funds trading at the moment, we at Insider Monkey hone in on the top tier of this club, close to 450 funds. It is widely believed that this group controls the majority of all hedge funds’ total asset base, and by monitoring their highest performing investments, we have found a number of investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 24 percentage points in 7 months (explore the details and some picks here).
Just as important, optimistic insider trading sentiment is another way to break down the world of equities. Just as you’d expect, there are plenty of motivations for an upper level exec to sell shares of his or her company, but just one, very simple reason why they would initiate a purchase. Various empirical studies have demonstrated the useful potential of this strategy if piggybackers understand what to do (learn more here).
Keeping this in mind, it’s important to take a peek at the latest action surrounding ADTRAN, Inc. (NASDAQ:ADTN).
What does the smart money think about ADTRAN, Inc. (NASDAQ:ADTN)?
In preparation for this year, a total of 6 of the hedge funds we track held long positions in this stock, a change of -50% from the previous quarter. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their stakes meaningfully.
When looking at the hedgies we track, Chuck Royce’s Royce & Associates had the largest position in ADTRAN, Inc. (NASDAQ:ADTN), worth close to $148.5 million, accounting for 0.5% of its total 13F portfolio. On Royce & Associates’s heels is Steadfast Capital Management, managed by Robert Pitts, which held a $9.2 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other hedgies that hold long positions include Cliff Asness’s AQR Capital Management, Joel Greenblatt’s Gotham Asset Management and Ken Griffin’s Citadel Investment Group.
Seeing as ADTRAN, Inc. (NASDAQ:ADTN) has witnessed bearish sentiment from the smart money, logic holds that there exists a select few fund managers that slashed their full holdings last quarter. Interestingly, Jim Simons’s Renaissance Technologies dumped the biggest investment of the “upper crust” of funds we track, valued at close to $4.6 million in stock., and SAC Subsidiary of CR Intrinsic Investors was right behind this move, as the fund cut about $1.9 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 6 funds last quarter.
What do corporate executives and insiders think about ADTRAN, Inc. (NASDAQ:ADTN)?
Bullish insider trading is best served when the company in focus has seen transactions within the past six months. Over the latest 180-day time frame, ADTRAN, Inc. (NASDAQ:ADTN) has experienced zero unique insiders buying, and 1 insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to ADTRAN, Inc. (NASDAQ:ADTN). These stocks are Arris Group, Inc. (NASDAQ:ARRS), Infinera Corp. (NASDAQ:INFN), Ciena Corporation (NASDAQ:CIEN), Loral Space & Communications Ltd. (NASDAQ:LORL), and NetGear, Inc. (NASDAQ:NTGR). This group of stocks belong to the communication equipment industry and their market caps resemble ADTN’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Arris Group, Inc. (NASDAQ:ARRS)||16||0||5|
|Infinera Corp. (NASDAQ:INFN)||8||1||1|
|Ciena Corporation (NASDAQ:CIEN)||15||0||12|
|Loral Space & Communications Ltd. (NASDAQ:LORL)||22||0||0|
|NetGear, Inc. (NASDAQ:NTGR)||5||0||5|
With the results shown by Insider Monkey’s time-tested strategies, retail investors must always watch hedge fund and insider trading activity, and ADTRAN, Inc. (NASDAQ:ADTN) is an important part of this process.