MetroPCS Communications Inc (NYSE:PCS) has seen an increase in enthusiasm from smart money lately.
If you'd ask most investors, hedge funds are viewed as worthless, old investment tools of years past. While there are over 8000 funds with their doors open at the moment, we choose to focus on the bigwigs of this group, about 450 funds. It is widely believed that this group has its hands on the majority of the smart money's total capital, and by monitoring their best investments, we have deciphered a few investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually 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 beaten the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).
Just as integral, positive insider trading sentiment is a second way to parse down the marketplace. There are a number of stimuli for a corporate insider to get rid of shares of his or her company, but only one, very obvious reason why they would buy. Several empirical studies have demonstrated the useful potential of this strategy if shareholders know where to look (learn more here).
With all of this in mind, let's take a glance at the latest action regarding MetroPCS Communications Inc (NYSE:PCS).
At the end of the fourth quarter, a total of 43 of the hedge funds we track were long in this stock, a change of 54% from one quarter earlier. With hedge funds' capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes substantially.
Of the funds we track, John Paulson's Paulson & Co had the biggest position in MetroPCS Communications Inc (NYSE:PCS), worth close to $316 million billion, accounting for 1.9% of its total 13F portfolio. Coming in second is Cliff Asness of AQR Capital Management, with a $42 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other peers with similar optimism include James Dondero's Highland Capital Management, John M. Angelo and Michael L. Gordon's Angelo Gordon & Co and Jamie Zimmerman's Litespeed Management.
With a general bullishness amongst the heavyweights, key money managers were leading the bulls' herd. Angelo Gordon & Co, managed by John M. Angelo and Michael L. Gordon, established the largest position in MetroPCS Communications Inc (NYSE:PCS). Angelo Gordon & Co had 35 million invested in the company at the end of the quarter. Jamie Zimmerman's Litespeed Management also initiated a $25 million position during the quarter. The other funds with brand new PCS positions are John Brennan's Sirios Capital Management, Carl Tiedemann and Michael Tiedemann's TIG Advisors, and Rob Citrone's Discovery Capital Management.
Insider buying is particularly usable when the primary stock in question has seen transactions within the past half-year. Over the latest 180-day time period, MetroPCS Communications Inc (NYSE:PCS) has experienced zero unique insiders purchasing, and 8 insider sales (see the details of insider trades here).
With the results exhibited by our strategies, retail investors must always watch hedge fund and insider trading activity, and MetroPCS Communications Inc (NYSE:PCS) applies perfectly to this mantra.
Insider Monkey's small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.