Is Oi SA (ADR) (NYSE:OIBR) a bargain? Investors who are in the know are turning less bullish. The number of bullish hedge fund positions fell by 4 recently.
In the eyes of most investors, hedge funds are seen as slow, outdated financial vehicles of the past. While there are over 8000 funds trading today, we at Insider Monkey choose to focus on the leaders of this group, about 450 funds. It is estimated that this group has its hands on the lion’s share of the smart money’s total capital, and by monitoring their best stock picks, we have brought to light 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 annum 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 24 percentage points in 7 months (check out a sample of our picks).
Equally as beneficial, optimistic insider trading activity is a second way to break down the investments you’re interested in. Obviously, there are lots of incentives for an executive to drop shares of his or her company, but just one, very simple reason why they would initiate a purchase. Plenty of academic studies have demonstrated the valuable potential of this tactic if investors know what to do (learn more here).
With all of this in mind, let’s take a peek at the latest action regarding Oi SA (ADR) (NYSE:OIBR).
How are hedge funds trading Oi SA (ADR) (NYSE:OIBR)?
Heading into 2013, a total of 6 of the hedge funds we track held long positions in this stock, a change of -40% from the third quarter. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their holdings significantly.
According to our comprehensive database, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital had the biggest position in Oi SA (ADR) (NYSE:OIBR), worth close to $19 million, comprising 0.1% of its total 13F portfolio. Coming in second is Israel Englander of Millennium Management, with a $12.5 million position; 0.1% of its 13F portfolio is allocated to the stock. Other hedge funds that are bullish include Jim Simons’s Renaissance Technologies, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Ken Griffin’s Citadel Investment Group.
Because Oi SA (ADR) (NYSE:OIBR) has experienced declining sentiment from the smart money, it’s safe to say that there was a specific group of hedge funds who were dropping their entire stakes in Q4. At the top of the heap, John Thaler’s JAT Capital Management dumped the biggest investment of the “upper crust” of funds we track, valued at close to $9.2 million in stock., and Eric Bannasch of Cadian Capital was right behind this move, as the fund sold off about $2.4 million worth. These transactions are important to note, as total hedge fund interest fell by 4 funds in Q4.
How have insiders been trading Oi SA (ADR) (NYSE:OIBR)?
Insider purchases made by high-level executives is best served when the company we’re looking at has seen transactions within the past 180 days. Over the last half-year time period, Oi SA (ADR) (NYSE:OIBR) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to Oi SA (ADR) (NYSE:OIBR). These stocks are Vonage Holdings Corp. (NYSE:VG), Level 3 Communications, Inc. (NYSE:LVLT), Neustar Inc (NYSE:NSR), Telecom Argentina S.A. (ADR) (NYSE:TEO), and Cogent Communications Group, Inc. (NASDAQ:CCOI). All of these stocks are in the diversified communication services industry and their market caps match OIBR’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Vonage Holdings Corp. (NYSE:VG) | 14 | 0 | 7 |
| Level 3 Communications, Inc. (NYSE:LVLT) | 16 | 0 | 12 |
| Neustar Inc (NYSE:NSR) | 13 | 0 | 1 |
| Telecom Argentina S.A. (ADR) (NYSE:TEO) | 7 | 0 | 0 |
| Cogent Communications Group, Inc. (NASDAQ:CCOI) | 13 | 0 | 7 |
With the returns shown by Insider Monkey’s tactics, everyday investors must always monitor hedge fund and insider trading activity, and Oi SA (ADR) (NYSE:OIBR) is an important part of this process.
