Is Time Warner Cable Inc (TWC) Going to Burn These Hedge Funds?

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Time Warner Cable Inc (NYSE:TWC) investors should be aware of a decrease in activity from the world’s largest hedge funds lately.

If you’d ask most traders, hedge funds are assumed to be slow, outdated investment tools of years past. While there are over 8000 funds trading at present, we at Insider Monkey hone in on the aristocrats of this group, close to 450 funds. It is estimated that this group controls the majority of all hedge funds’ total capital, and by keeping an eye on their top investments, we have formulated a number of investment strategies that have historically beaten 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 outperformed the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Equally as important, positive insider trading sentiment is another way to break down the stock market universe. Obviously, there are a variety of motivations for an insider to get rid of shares of his or her company, but only one, very clear reason why they would initiate a purchase. Several academic studies have demonstrated the market-beating potential of this tactic if investors know what to do (learn more here).

With these “truths” under our belt, we’re going to take a gander at the recent action encompassing Time Warner Cable Inc (NYSE:TWC).

What have hedge funds been doing with Time Warner Cable Inc (NYSE:TWC)?

In preparation for this quarter, a total of 37 of the hedge funds we track held long positions in this stock, a change of -5% from the first quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their stakes considerably.

Time Warner Cable Inc (NYSE:TWC)Of the funds we track, Highfields Capital Management, managed by Jonathon Jacobson, holds the biggest position in Time Warner Cable Inc (NYSE:TWC). Highfields Capital Management has a $245.8 million position in the stock, comprising 2.2% of its 13F portfolio. Sitting at the No. 2 spot is Lansdowne Partners, managed by Paul Ruddock and Steve Heinz, which held a $240.8 million position; the fund has 3.3% of its 13F portfolio invested in the stock. Other peers that are bullish include Philippe Laffont’s Coatue Management, Larry Robbins’s Glenview Capital and David Costen Haley’s HBK Investments.

Seeing as Time Warner Cable Inc (NYSE:TWC) has experienced a declination in interest from the smart money, it’s easy to see that there lies a certain “tier” of money managers that slashed their positions entirely at the end of the first quarter. Intriguingly, Robert Pitts’s Steadfast Capital Management dropped the largest stake of all the hedgies we watch, comprising an estimated $103.3 million in stock., and Malcolm Fairbairn of Ascend Capital was right behind this move, as the fund said goodbye to about $22.4 million worth. These transactions are interesting, as total hedge fund interest fell by 2 funds at the end of the first quarter.

Insider trading activity in Time Warner Cable Inc (NYSE:TWC)

Insider buying is particularly usable when the company in focus has seen transactions within the past 180 days. Over the latest half-year time frame, Time Warner Cable Inc (NYSE:TWC) has seen zero unique insiders buying, and 9 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Time Warner Cable Inc (NYSE:TWC). These stocks are DISH Network Corp. (NASDAQ:DISH), Liberty Global Inc. (NASDAQ:LBTYA), Discovery Communications Inc. (NASDAQ:DISCA), DIRECTV (NASDAQ:DTV), and Viacom, Inc. (NASDAQ:VIAB). This group of stocks are in the catv systems industry and their market caps resemble TWC’s market cap.

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