Vonage Holdings Corp. (NYSE:VG) investors should pay attention to an increase in hedge fund interest recently.
In the eyes of most traders, hedge funds are seen as underperforming, outdated investment vehicles of years past.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 oversees the majority of the hedge fund industry’s total asset base, and by keeping an eye on their top stock picks, we have come up with a number of investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a 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 23.3 percentage points in 8 months (see the details here).
Just as integral, bullish insider trading activity is another way to parse down the marketplace. As the old adage goes: there are plenty of motivations for a bullish insider to sell shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Many academic studies have demonstrated the valuable potential of this method if piggybackers know where to look (learn more here).
Consequently, it’s important to take a glance at the latest action surrounding Vonage Holdings Corp. (NYSE:VG).
How have hedgies been trading Vonage Holdings Corp. (NYSE:VG)?
At the end of the first quarter, a total of 17 of the hedge funds we track held long positions in this stock, a change of 21% from the first quarter. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their holdings meaningfully.
Consequently, key hedge funds have jumped into Vonage Holdings Corp. (NYSE:VG) headfirst. Whitebox Advisors, managed by Andy Redleaf, established the most valuable position in Vonage Holdings Corp. (NYSE:VG). Whitebox Advisors had 0.6 million invested in the company at the end of the quarter. Charles Davidson’s Wexford Capital also initiated a $0.5 million position during the quarter. The other funds with new positions in the stock are Chuck Royce’s Royce & Associates, Ken Griffin’s Citadel Investment Group, and Ken Griffin’s Citadel Investment Group.
What have insiders been doing with Vonage Holdings Corp. (NYSE:VG)?
Bullish insider trading is particularly usable when the company we’re looking at has seen transactions within the past half-year. Over the last six-month time frame, Vonage Holdings Corp. (NYSE:VG) has seen zero unique insiders purchasing, and 7 insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to Vonage Holdings Corp. (NYSE:VG). These stocks are Lumos Networks Corp (NASDAQ:LMOS), Cogent Communications Group, Inc. (NASDAQ:CCOI), RigNet Inc (NASDAQ:RNET), Iridium Communications Inc. (NASDAQ:IRDM), and Premiere Global Services, Inc. (NYSE:PGI). This group of stocks belong to the diversified communication services industry and their market caps are closest to VG’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Lumos Networks Corp (NASDAQ:LMOS) | 4 | 0 | 0 |
| Cogent Communications Group, Inc. (NASDAQ:CCOI) | 15 | 0 | 7 |
| RigNet Inc (NASDAQ:RNET) | 1 | 1 | 6 |
| Iridium Communications Inc. (NASDAQ:IRDM) | 7 | 2 | 1 |
| Premiere Global Services, Inc. (NYSE:PGI) | 9 | 0 | 2 |
With the results demonstrated by the aforementioned studies, everyday investors must always watch hedge fund and insider trading activity, and Vonage Holdings Corp. (NYSE:VG) applies perfectly to this mantra.
