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Neustar Inc (NSR), Research In Motion Ltd (BBRY): Are Hedge Funds Right About This Stock?

Neustar Inc (NYSE:NSR) was in 13 hedge funds’ portfolio at the end of the fourth quarter of 2012. NSR investors should pay attention to an increase in hedge fund sentiment recently. There were 12 hedge funds in our database with NSR positions at the end of the previous quarter. Plus, we’ll see how it stacks up against key peer Research In Motion Ltd (NASDAQ:BBRY).

To most stock holders, hedge funds are perceived as unimportant, old investment vehicles of yesteryear. While there are greater than 8000 funds with their doors open at the moment, we at Insider Monkey look at the crème de la crème of this club, around 450 funds. It is widely believed that this group oversees the majority of the hedge fund industry’s total capital, and by paying attention to their top equity investments, we have determined a few investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy outperformed 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 beaten the S&P 500 index by 25 percentage points in 6.5 month (explore the details and some picks here).

Equally as important, bullish insider trading activity is another way to parse down the stock market universe. There are a variety of reasons for an upper level exec to get rid of shares of his or her company, but just one, very obvious reason why they would behave bullishly. Various academic studies have demonstrated the impressive potential of this method if piggybackers know what to do (learn more here).

Now, it’s important to take a gander at the key action regarding Neustar Inc (NYSE:NSR).

What have hedge funds been doing with Neustar Inc (NYSE:NSR)?

At year’s end, a total of 13 of the hedge funds we track held long positions in this stock, a change of 8% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes meaningfully.

RENAISSANCE TECHNOLOGIESOf the funds we track, Renaissance Technologies, managed by Jim Simons, holds the most valuable position in Neustar Inc (NYSE:NSR). Renaissance Technologies has a $75 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is Edward Goodnow of Goodnow Investment Group, with a $32 million position; 0.9% of its 13F portfolio is allocated to the stock. Some other hedgies with similar optimism include D. E. Shaw’s D E Shaw, Brian Ashford-Russell and Tim Woolley’s Polar Capital and Israel Englander’s Millennium Management.

Consequently, specific money managers were leading the bulls’ herd. Platinum Management, managed by Mark A. Nordlicht, initiated the biggest position in Neustar Inc (NYSE:NSR). Platinum Management had 1 million invested in the company at the end of the quarter. Steven Cohen’s SAC Capital Advisors also made a $1 million investment in the stock during the quarter. The other funds with new positions in the stock are Neil Chriss’s Hutchin Hill Capital and Ken Griffin’s Citadel Investment Group.

How are insiders trading Neustar Inc (NYSE:NSR)?

Insider purchases made by high-level executives is at its handiest when the company we’re looking at has seen transactions within the past 180 days. Over the latest half-year time frame, Neustar Inc (NYSE:NSR) has seen zero unique insiders purchasing, and 1 insider sales (see the details of insider trades here).

Highlight peers include Research In Motion Ltd (NASDAQ:BBRY), which has seen quite a bit of press lately, Level 3 Communications, Inc. (NYSE:LVLT) and Cogent Communications Group, Inc. (NASDAQ:CCOI).

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Cogent Communications Group, Inc. (NASDAQ:CCOI) 13 0 7
Research In Motion Ltd (NASDAQ:BBRY) 0 0
Level 3 Communications, Inc. (NYSE:LVLT) 16 0 12

With the results demonstrated by Insider Monkey’s tactics, retail investors must always watch hedge fund and insider trading sentiment, and Neustar Inc (NYSE:NSR) applies perfectly to this mantra.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.

Related tickers: Research In Motion Ltd (NASDAQ:BBRY), Level 3 Communications, Inc. (NYSE:LVLT), Cogent Communications Group, Inc. (NASDAQ:CCOI).

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