Do Hedge Funds and Insiders Love Level 3 Communications, Inc. (LVLT)?

Level 3 Communications, Inc. (NYSE:LVLT) has seen an increase in support from the world’s most elite money managers recently.

To most traders, hedge funds are assumed to be underperforming, outdated financial tools of the past. While there are over 8000 funds in operation at the moment, we look at the moguls of this group, around 450 funds. It is widely believed that this group oversees most of all hedge funds’ total capital, and by paying attention to their best stock picks, we have unsheathed a few investment strategies that have historically outstripped the broader indices. 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 beaten the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Equally as key, positive insider trading sentiment is a second way to parse down the investments you’re interested in. Just as you’d expect, there are many motivations for a corporate insider to drop shares of his or her company, but just one, very simple reason why they would buy. Various academic studies have demonstrated the useful potential of this method if “monkeys” understand where to look (learn more here).

Now, we’re going to take a peek at the latest action encompassing Level 3 Communications, Inc. (NYSE:LVLT).

What does the smart money think about Level 3 Communications, Inc. (NYSE:LVLT)?

In preparation for this quarter, a total of 19 of the hedge funds we track were long in this stock, a change of 6% from one quarter earlier. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes meaningfully.

Level 3 Communications, Inc. (NYSE:LVLT)According to our comprehensive database, Mason Hawkins’s Southeastern Asset Management had the most valuable position in Level 3 Communications, Inc. (NYSE:LVLT), worth close to $936.6 million, comprising 4.2% of its total 13F portfolio. Sitting at the No. 2 spot is Fairfax Financial Holdings, managed by Prem Watsa, which held a $262.2 million position; 9.8% of its 13F portfolio is allocated to the company. Other hedge funds that are bullish include Michael Johnston’s Steelhead Partners, Prem Watsa’s Fairfax Financial Holdings and Keith Meister’s Corvex Capital.

As industrywide interest jumped, some big names were leading the bulls’ herd. Caxton Associates LP, managed by Bruce Kovner, assembled the most valuable position in Level 3 Communications, Inc. (NYSE:LVLT). Caxton Associates LP had 1.6 million invested in the company at the end of the quarter. Michael Johnston’s Steelhead Partners also made a $1.3 million investment in the stock during the quarter. The following funds were also among the new LVLT investors: David Costen Haley’s HBK Investments and Mike Vranos’s Ellington.

How are insiders trading Level 3 Communications, Inc. (NYSE:LVLT)?

Bullish insider trading is particularly usable when the company in focus has experienced transactions within the past six months. Over the latest six-month time frame, Level 3 Communications, Inc. (NYSE:LVLT) has seen 1 unique insiders buying, and 12 insider sales (see the details of insider trades here).

With the results exhibited by Insider Monkey’s research, retail investors should always watch hedge fund and insider trading activity, and Level 3 Communications, Inc. (NYSE:LVLT) is no exception.

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