Is Verizon Communications Inc. (NYSE:VZ) Going to Burn These Hedge Funds?

Verizon Communications Inc. (NYSE:VZ) was in 34 hedge funds’ portfolio at the end of the fourth quarter of 2012. VZ has experienced a decrease in hedge fund interest recently. There were 46 hedge funds in our database with VZ positions at the end of the previous quarter.

At the moment, there are tons of methods investors can use to track publicly traded companies. A couple of the most useful are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the top money managers can beat the S&P 500 by a significant margin (see just how much).

Verizon Communications Inc. (NYSE:VZ)Equally as integral, optimistic insider trading activity is a second way to parse down the investments you’re interested in. There are plenty of incentives for an upper level exec to drop shares of his or her company, but only one, very clear reason why they would buy. Various academic studies have demonstrated the impressive potential of this strategy if you know where to look (learn more here).

With these “truths” under our belt, we’re going to take a look at the recent action encompassing Verizon Communications Inc. (NYSE:VZ).

Hedge fund activity in Verizon Communications Inc. (NYSE:VZ)

At year’s end, a total of 34 of the hedge funds we track held long positions in this stock, a change of -26% from the previous quarter. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their stakes significantly.

When looking at the hedgies we track, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the largest position in Verizon Communications Inc. (NYSE:VZ). Adage Capital Management has a $170 million position in the stock, comprising 0.6% of its 13F portfolio. Coming in second is John A. Levin of Levin Capital Strategies, with a $135 million position; 7.3% of its 13F portfolio is allocated to the company. Other hedge funds that are bullish include Cliff Asness’s AQR Capital Management, Jim Simons’s Renaissance Technologies and Eric Mindich’s Eton Park Capital.

Judging by the fact that Verizon Communications Inc. (NYSE:VZ) has witnessed falling interest from hedge fund managers, we can see that there was a specific group of hedgies who were dropping their full holdings at the end of the year. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital said goodbye to the largest investment of the 450+ funds we watch, valued at close to $36 million in stock., and Bart Baum of Ionic Capital Management was right behind this move, as the fund cut about $29 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 12 funds at the end of the year.

How have insiders been trading Verizon Communications Inc. (NYSE:VZ)?

Insider trading activity, especially when it’s bullish, is best served when the company in focus has seen transactions within the past six months. Over the last 180-day time frame, Verizon Communications Inc. (NYSE:VZ) has experienced zero unique insiders purchasing, and 4 insider sales (see the details of insider trades here).

With the results demonstrated by our strategies, retail investors must always keep an eye on hedge fund and insider trading sentiment, and Verizon Communications Inc. (NYSE:VZ) is an important part of this process.

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Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.

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