Is Verizon Communications Inc. (NYSE:VZ) a great investment right now? Investors who are in the know are reducing their bets on the stock. The number of bullish hedge fund positions decreased by 9 in recent months.
If you'd ask most traders, hedge funds are seen as worthless, old financial vehicles of the past. While there are greater than 8000 funds trading at present, we at Insider Monkey hone in on the leaders of this group, around 450 funds. Most estimates calculate that this group controls the lion's share of the hedge fund industry's total asset base, and by paying attention to their top stock picks, we have formulated a few investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy outperformed 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 23.3 percentage points in 8 months (check out a sample of our picks).
Just as beneficial, bullish insider trading sentiment is another way to parse down the investments you're interested in. There are a variety of stimuli for a corporate insider to cut shares of his or her company, but only one, very obvious reason why they would buy. Various academic studies have demonstrated the valuable potential of this strategy if piggybackers understand what to do (learn more here).
With these "truths" under our belt, we're going to take a peek at the recent action surrounding Verizon Communications Inc. (NYSE:VZ).
At Q1's end, a total of 29 of the hedge funds we track were long in this stock, a change of -24% from one quarter earlier.
Since Verizon Communications Inc. (NYSE:VZ) has witnessed bearish sentiment from hedge fund managers, logic holds that there lies a certain "tier" of funds who sold off their entire stakes at the end of the first quarter. Interestingly, Eric Mindich's Eton Park Capital dumped the largest stake of all the hedgies we track, comprising an estimated $62.5 million in stock., and John Hurley of Cavalry Asset Management was right behind this move, as the fund dumped about $45.5 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 9 funds at the end of the first quarter.
Insider purchases made by high-level executives is most useful when the primary stock in question has seen transactions within the past six months. Over the latest six-month time frame, Verizon Communications Inc. (NYSE:VZ) has experienced zero unique insiders purchasing, and 2 insider sales (see the details of insider trades here).
Let's go over hedge fund and insider activity in other stocks similar to Verizon Communications Inc. (NYSE:VZ). These stocks are Windstream Corporation (NASDAQ:WIN), CenturyLink, Inc. (NYSE:CTL), Chunghwa Telecom Co., Ltd (ADR) (NYSE:CHT), BCE Inc. (USA) (NYSE:BCE), and AT&T Inc. (NYSE:T). This group of stocks belong to the telecom services - domestic industry and their market caps resemble VZ's market cap.