Windstream Corporation (NASDAQ:WIN
) is a widely discussed stock, but here's one reason why the bears may win the argument for the rest of 2013.
If you were to ask many of your fellow readers, hedge funds are perceived as useless, old investment tools of a forgotten age. Although there are over 8,000 hedge funds with their doors open today, this site looks at the top tier of this club, about 525 funds. It is widely held that this group oversees the majority of all hedge funds' total capital, and by keeping an eye on their highest performing stock picks, we've identified a number of investment strategies that have historically outstripped the S&P 500. Our small-cap hedge fund strategy outperformed 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 beaten the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here
Equally as necessary, optimistic insider trading activity is a second way to look at the stock market universe. There are plenty of reasons for an executive to drop shares of his or her company, but only one, very clear reason why they would initiate a purchase. Several academic studies have demonstrated the market-beating potential of this strategy if shareholders understand what to do (learn more here
Keeping this in mind, it's important to discuss the recent info surrounding Windstream Corporation (NASDAQ:WIN
Hedge fund activity in Windstream Corporation (NASDAQ:WIN)
In preparation for the third quarter, a total of 11 of the hedge funds we track were long in this stock, a change of -31% from the first quarter. With hedgies' capital changing hands, there exists an "upper tier" of notable hedge fund managers who were boosting their stakes substantially.
Out of the hedge funds we follow, Nokomis Capital, managed by Brett Hendrickson, holds the largest position in Windstream Corporation (NASDAQ:WIN). Nokomis Capital has a $12.7 million position in the stock, comprising 5.1% of its 13F portfolio. Sitting at the No. 2 spot is Robert Pitts of Steadfast Capital Management, with a $10.6 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Other hedge funds that hold long positions include D. E. Shaw's D E Shaw, Jeffrey Jon Berney's TriOaks Capital Management and Ken Griffin's Citadel Investment Group.
Because Windstream Corporation (NASDAQ:WIN) has experienced a fall in interest from the smart money's best and brightest, we can see that there is a sect of money managers who were dropping their entire stakes heading into Q2. Intriguingly, Patrick Halloran's Wayzata Investment Partners
dropped the biggest investment of the 450+ funds we track, worth an estimated $19.3 million in stock, and Glenn Russell Dubin of Highbridge Capital Management was right behind this move, as the fund sold off about $5.5 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 5 funds heading into Q2.
What do corporate executives and insiders think about Windstream Corporation (NASDAQ:WIN)?
Bullish insider trading is at its handiest when the company in focus has seen transactions within the past six months. Over the latest 180-day time frame, Windstream Corporation (NASDAQ:WIN) has seen 4 unique insiders buying, and 1 insider sales (see the details of insider trades here
We'll also examine the relationship between both of these indicators in other stocks similar to Windstream Corporation (NASDAQ:WIN). These stocks are Chunghwa Telecom Co., Ltd (ADR) (NYSE:CHT
), Atlantic Tele-Network, Inc. (NASDAQ:ATNI
), CenturyLink, Inc. (NYSE:CTL
), TW Telecom Inc (NASDAQ:TWTC
), and Frontier Communications Corp (NASDAQ:FTR
). This group of stocks are the members of the telecom services - domestic industry and their market caps match WIN's market cap.