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Is Comverse Inc (CNSI) Going to Burn These Hedge Funds?

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To many of your peers, hedge funds are seen as bloated, old financial tools of a period lost to current times. Although there are over 8,000 hedge funds in operation today, Insider Monkey focuses on the aristocrats of this club, close to 525 funds. It is assumed that this group oversees the majority of the hedge fund industry’s total assets, and by tracking their highest quality picks, we’ve spotted 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 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 outperformed the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).

Equally as useful, optimistic insider trading sentiment is a second way to analyze the investments you’re interested in. Just as you’d expect, there are a number of stimuli for a corporate insider to drop shares of his or her company, but only one, very obvious reason why they would buy. Many academic studies have demonstrated the useful potential of this tactic if “monkeys” know where to look (learn more here).

Furthermore, it’s important to study the latest info about Comverse Inc (NASDAQ:CNSI).

How are hedge funds trading Comverse Inc (NASDAQ:CNSI)?

Heading into Q3, a total of 16 of the hedge funds we track were bullish in this stock, a change of -16% from one quarter earlier. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their stakes significantly.

Comverse Inc (NASDAQ:CNSI)When using filings from the hedgies we track, Michael Blitzer’s Kingstown Capital Management had the biggest position in Comverse Inc (NASDAQ:CNSI), worth close to $29.8 million, comprising 4.9% of its total 13F portfolio. Coming in second is Michael Doheny of Freshford Capital Management, with a $20.5 million position; the fund has 3% of its 13F portfolio invested in the stock. Other hedgies that hold long positions include Steven Cohen’s SAC Capital Advisors, Howard Guberman’s Gruss Asset Management and Cliff Asness’s AQR Capital Management.

Since Comverse Inc (NASDAQ:CNSI) has faced dropping sentiment from upper-tier hedge fund managers, it’s safe to say that there was a specific group of hedge funds that decided to sell off their full holdings at the end of the second quarter. Intriguingly, Malcolm Fairbairn’s Ascend Capital said goodbye to the largest stake of the 450+ funds we monitor, valued at about $7.7 million in stock. Michael A. Price and Amos Meron’s fund, Empyrean Capital Partners, also cut its stock, about $3.6 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 3 funds at the end of the second quarter.

Insider trading activity in Comverse Inc (NASDAQ:CNSI)

Bullish insider trading is most useful when the company we’re looking at has seen transactions within the past six months. Over the latest six-month time period, Comverse Inc (NASDAQ:CNSI) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll also review the relationship between both of these indicators in other stocks similar to Comverse Inc (NASDAQ:CNSI). These stocks are Performant Financial Corp (NASDAQ:PFMT), COMSCORE, Inc. (NASDAQ:SCOR), Examworks Group, Inc. (NYSE:EXAM), Green Dot Corporation (NYSE:GDOT), and American Public Education, Inc. (NASDAQ:APEI). This group of stocks are in the business services industry and their market caps are closest to CNSI’s market cap.

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