Is JDS Uniphase Corp (NASDAQ:JDSU) a safe investment now? The smart money is reducing their bets on the stock. The number of bullish hedge fund positions were cut by 2 in recent months.
At the moment, there are tons of methods market participants can use to analyze stocks. A pair of the most under-the-radar are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the best hedge fund managers can beat their index-focused peers by a very impressive margin (see just how much).
Just as beneficial, bullish insider trading sentiment is a second way to break down the stock market universe. Just as you'd expect, there are lots of stimuli for an insider to get rid of shares of his or her company, but only one, very simple reason why they would behave bullishly. Plenty of empirical studies have demonstrated the valuable potential of this method if shareholders understand where to look (learn more here).
Now, it's important to take a gander at the recent action encompassing JDS Uniphase Corp (NASDAQ:JDSU).
Heading into Q2, a total of 22 of the hedge funds we track were bullish in this stock, a change of -8% from one quarter earlier. With hedgies' sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their holdings substantially.
When looking at the hedgies we track, Empire Capital Management, managed by Scott Fine and Peter Richards, holds the most valuable position in JDS Uniphase Corp (NASDAQ:JDSU). Empire Capital Management has a $31.5 million position in the stock, comprising 3% of its 13F portfolio. Sitting at the No. 2 spot is Israel Englander of Millennium Management, with a $18.8 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining peers with similar optimism include Glenn Russell Dubin's Highbridge Capital Management, Ken Griffin's Citadel Investment Group and Brian Ashford-Russell and Tim Woolley's Polar Capital.
Since JDS Uniphase Corp (NASDAQ:JDSU) has experienced falling interest from the smart money, it's safe to say that there exists a select few funds who sold off their positions entirely last quarter. At the top of the heap, Mark Broach's Manatuck Hill Partners cut the biggest stake of all the hedgies we watch, worth close to $20.1 million in stock., and SAC Subsidiary of Sigma Capital Management was right behind this move, as the fund dropped about $7.2 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 2 funds last quarter.
Bullish insider trading is best served when the company we're looking at has experienced transactions within the past six months. Over the latest six-month time frame, JDS Uniphase Corp (NASDAQ:JDSU) has experienced zero unique insiders purchasing, and 6 insider sales (see the details of insider trades here).
Let's go over hedge fund and insider activity in other stocks similar to JDS Uniphase Corp (NASDAQ:JDSU). These stocks are Acme Packet, Inc. (NASDAQ:APKT), Exelis Inc (NYSE:XLS), ViaSat, Inc. (NASDAQ:VSAT), Echostar Corporation (NASDAQ:SATS), and Alcatel Lucent SA (ADR) (NYSE:ALU). All of these stocks are in the communication equipment industry and their market caps are closest to JDSU's market cap.