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This Metric Says You Are Smart to Sell CenturyLink, Inc. (NYSE:CTL)

CenturyLink, Inc. (NYSE:CTL) has experienced a decrease in hedge fund sentiment recently.

If you’d ask most traders, hedge funds are viewed as unimportant, old financial vehicles of the past. While there are more than 8000 funds with their doors open today, we at Insider Monkey choose to focus on the moguls of this group, close to 450 funds. It is widely believed that this group has its hands on most of the hedge fund industry’s total asset base, and by monitoring their highest performing stock picks, we have figured out a number of investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy outperformed 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 outpaced the S&P 500 index by 25 percentage points in 6.5 month (check out a sample of our picks).

Equally as integral, positive insider trading activity is another way to parse down the world of equities. Obviously, there are a number of incentives for a corporate insider to cut shares of his or her company, but only one, very obvious reason why they would buy. Plenty of academic studies have demonstrated the impressive potential of this tactic if “monkeys” understand where to look (learn more here).

Keeping this in mind, let’s take a peek at the latest action encompassing CenturyLink, Inc. (NYSE:CTL).

What have hedge funds been doing with CenturyLink, Inc. (NYSE:CTL)?

In preparation for this year, a total of 19 of the hedge funds we track were long in this stock, a change of -14% from the previous quarter. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their stakes considerably.

Of the funds we track, Phill Gross and Robert Atchinson’s Adage Capital Management had the most valuable position in CenturyLink, Inc. (NYSE:CTL), worth close to $96 million, accounting for 0.4% of its total 13F portfolio. Coming in second is Alpine Associates, managed by Robert Emil Zoellner, which held a $36 million position; the fund has 1.5% of its 13F portfolio invested in the stock. Remaining peers with similar optimism include Clint Carlson’s Carlson Capital, Ken Griffin’s Citadel Investment Group and David Harding’s Winton Capital Management.

Since CenturyLink, Inc. (NYSE:CTL) has faced declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there were a few money managers that slashed their entire stakes at the end of the year. It’s worth mentioning that Jim Simons’s Renaissance Technologies dumped the biggest position of all the hedgies we monitor, worth close to $14 million in stock., and Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital was right behind this move, as the fund cut about $9 million worth. These transactions are important to note, as total hedge fund interest was cut by 3 funds at the end of the year.

How are insiders trading CenturyLink, Inc. (NYSE:CTL)?

Insider trading activity, especially when it’s bullish, is particularly usable when the primary stock in question has seen transactions within the past half-year. Over the latest six-month time frame, CenturyLink, Inc. (NYSE:CTL) has seen 1 unique insiders buying, and 5 insider sales (see the details of insider trades here).

With the returns demonstrated by our time-tested strategies, retail investors should always monitor hedge fund and insider trading activity, and CenturyLink, Inc. (NYSE:CTL) shareholders fit into this picture quite nicely.

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

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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