Is Polycom Inc (NASDAQ:PLCM) undervalued? The best stock pickers are turning bullish. The number of long hedge fund bets improved by 4 lately.
According to most traders, hedge funds are viewed as slow, outdated financial tools of years past. While there are over 8000 funds in operation at the moment, we at Insider Monkey hone in on the upper echelon of this group, close to 450 funds. It is widely believed that this group has its hands on the lion's share of the smart money's total asset base, and by monitoring their top equity investments, we have figured out a number of investment strategies that have historically outstripped the 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 began to sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 25 percentage points in 6.5 month (check out a sample of our picks).
Equally as important, positive insider trading sentiment is another way to parse down the financial markets. Just as you'd expect, there are many stimuli for an upper level exec to sell shares of his or her company, but only one, very simple reason why they would buy. Plenty of empirical studies have demonstrated the useful potential of this strategy if investors know what to do (learn more here).
With these "truths" under our belt, we're going to take a look at the key action regarding Polycom Inc (NASDAQ:PLCM).
At the end of the fourth quarter, a total of 21 of the hedge funds we track held long positions in this stock, a change of 24% from the third quarter. With the smart money's capital changing hands, there exists a select group of notable hedge fund managers who were upping their stakes considerably.
According to our comprehensive database, Maverick Capital, managed by Lee Ainslie, holds the largest position in Polycom Inc (NASDAQ:PLCM). Maverick Capital has a $86 million position in the stock, comprising 1.3% of its 13F portfolio. Coming in second is Omega Advisors, managed by Leon Cooperman, which held a $59 million position; 0.5% of its 13F portfolio is allocated to the company. Some other peers with similar optimism include Ken Griffin's Citadel Investment Group, Philippe Laffont's Coatue Management and Cliff Asness's AQR Capital Management.
As aggregate interest increased, specific money managers have been driving this bullishness. Ascend Capital, managed by Malcolm Fairbairn, initiated the most outsized position in Polycom Inc (NASDAQ:PLCM). Ascend Capital had 11 million invested in the company at the end of the quarter. Glenn Russell Dubin's Highbridge Capital Management also made a $2 million investment in the stock during the quarter. The other funds with new positions in the stock are Clint Coghill's Coghill Capital Management, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, and Joel Greenblatt's Gotham Asset Management.
Bullish insider trading is particularly usable when the company in question has seen transactions within the past half-year. Over the latest 180-day time period, Polycom Inc (NASDAQ:PLCM) has experienced zero unique insiders purchasing, and 5 insider sales (see the details of insider trades here).
With the returns shown by our studies, retail investors should always monitor hedge fund and insider trading sentiment, and Polycom Inc (NASDAQ:PLCM) is no exception.
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.