Is Alcatel Lucent SA (ADR) (NYSE:ALU) undervalued? Hedge funds are getting more optimistic. The number of bullish hedge fund positions inched up by 1 in recent months.
In the eyes of most shareholders, hedge funds are assumed to be worthless, outdated investment vehicles of yesteryear. While there are more than 8000 funds in operation at present, we hone in on the leaders of this group, about 450 funds. Most estimates calculate that this group controls the majority of all hedge funds’ total asset base, and by watching their top investments, we have determined a number of investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points annually 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 outclassed the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).
Equally as integral, optimistic insider trading activity is another way to parse down the stock market universe. As the old adage goes: there are plenty of reasons for an upper level exec to downsize shares of his or her company, but only one, very obvious reason why they would buy. Various empirical studies have demonstrated the valuable potential of this tactic if shareholders know what to do (learn more here).
With these “truths” under our belt, we’re going to take a look at the key action encompassing Alcatel Lucent SA (ADR) (NYSE:ALU).
What does the smart money think about Alcatel Lucent SA (ADR) (NYSE:ALU)?
In preparation for this quarter, a total of 17 of the hedge funds we track were bullish in this stock, a change of 6% from the first quarter. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their stakes meaningfully.
Of the funds we track, Steven Cohen’s SAC Capital Advisors had the largest position in Alcatel Lucent SA (ADR) (NYSE:ALU), worth close to $45.8 million, comprising 0.2% of its total 13F portfolio. The second largest stake is held by Jericho Capital Asset Management, managed by Josh Resnick, which held a $24.9 million position; 2.6% of its 13F portfolio is allocated to the company. Remaining hedge funds that are bullish include Brett Hendrickson’s Nokomis Capital, Scott Fine and Peter Richards’s Empire Capital Management and Joseph A. Jolson’s Harvest Capital Strategies.
Consequently, specific money managers were leading the bulls’ herd. Empire Capital Management, managed by Scott Fine and Peter Richards, created the most outsized position in Alcatel Lucent SA (ADR) (NYSE:ALU). Empire Capital Management had 9.6 million invested in the company at the end of the quarter. Joseph A. Jolson’s Harvest Capital Strategies also initiated a $7.7 million position during the quarter. The following funds were also among the new ALU investors: Gregory A. Weaver’s Invicta Capital Management, SAC Subsidiary’s Sigma Capital Management, and Michael Kao’s Akanthos Capital.
How have insiders been trading Alcatel Lucent SA (ADR) (NYSE:ALU)?
Insider buying is particularly usable when the company in question has seen transactions within the past 180 days. Over the last half-year time frame, Alcatel Lucent SA (ADR) (NYSE:ALU) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
With the results demonstrated by our studies, everyday investors should always watch hedge fund and insider trading sentiment, and Alcatel Lucent SA (ADR) (NYSE:ALU) is an important part of this process.