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Hedge Funds Are Dumping Comverse Technology, Inc. (NASDAQ:CMVT)

Is Comverse Technology, Inc. (NASDAQ:CMVT) a healthy stock for your portfolio? The best stock pickers are getting less optimistic. The number of bullish hedge fund positions were cut by 6 recently.

Comverse Technology, Inc.

If you’d ask most shareholders, hedge funds are viewed as underperforming, outdated financial vehicles of yesteryear. While there are over 8000 funds in operation at present, we hone in on the moguls of this club, around 450 funds. Most estimates calculate that this group oversees most of the hedge fund industry’s total capital, and by paying attention to their highest performing picks, we have uncovered a few investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per year 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 topped the S&P 500 index by 25 percentage points in 6.5 month (check out a sample of our picks).

Equally as important, optimistic insider trading activity is a second way to parse down the world of equities. Just as you’d expect, there are a number of incentives for an upper level exec to drop shares of his or her company, but just one, very obvious reason why they would buy. Several academic studies have demonstrated the valuable potential of this tactic if piggybackers understand what to do (learn more here).

With these “truths” under our belt, let’s take a gander at the recent action surrounding Comverse Technology, Inc. (NASDAQ:CMVT).

Hedge fund activity in Comverse Technology, Inc. (NASDAQ:CMVT)

At year’s end, a total of 23 of the hedge funds we track were long in this stock, a change of -21% from the third quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their stakes meaningfully.

Of the funds we track, Cadian Capital, managed by Eric Bannasch, holds the most valuable position in Comverse Technology, Inc. (NASDAQ:CMVT). Cadian Capital has a $50 million position in the stock, comprising 1.6% of its 13F portfolio. The second largest stake is held by North Run Capital, managed by Thomas Ellis and Todd Hammer, which held a $42 million position; the fund has 4.7% of its 13F portfolio invested in the stock. Remaining hedge funds that hold long positions include Clifton S. Robbins’s Blue Harbour Group, Robert Pitts’s Steadfast Capital Management and Michael Blitzer’s Kingstown Capital Management.

Seeing as Comverse Technology, Inc. (NASDAQ:CMVT) has experienced falling interest from hedge fund managers, it’s easy to see that there is a sect of hedge funds who sold off their entire stakes in Q4. At the top of the heap, Guru Ramakrishnan’s Meru Capital dropped the biggest position of all the hedgies we watch, comprising about $14 million in stock., and Wilmot B. Harkey and Daniel Mack of Nantahala Capital Management was right behind this move, as the fund said goodbye to about $13 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 6 funds in Q4.

Insider trading activity in Comverse Technology, Inc. (NASDAQ:CMVT)

Insider trading activity, especially when it’s bullish, is particularly usable when the company in question has experienced transactions within the past six months. Over the last six-month time period, Comverse Technology, Inc. (NASDAQ:CMVT) has experienced zero unique insiders buying, and 3 insider sales (see the details of insider trades here).

With the results demonstrated by Insider Monkey’s studies, everyday investors must always keep an eye on hedge fund and insider trading activity, and Comverse Technology, Inc. (NASDAQ:CMVT) is no exception.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

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