FairPoint Communications Inc (FRP): Are Hedge Funds Right About This Stock?

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FairPoint Communications Inc (NASDAQ:FRP) was in 11 hedge funds’ portfolio at the end of the first quarter of 2013. FRP investors should be aware of a decrease in enthusiasm from smart money of late. There were 12 hedge funds in our database with FRP holdings at the end of the previous quarter.

FairPoint Communications Inc (NASDAQ:FRP)

To the average investor, there are tons of methods market participants can use to analyze their holdings. Two of the best are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the elite investment managers can outperform the S&P 500 by a solid margin (see just how much).

Equally as important, positive insider trading activity is a second way to parse down the investments you’re interested in. Obviously, there are lots of incentives for a bullish insider to sell shares of his or her company, but just one, very simple reason why they would behave bullishly. Plenty of academic studies have demonstrated the impressive potential of this method if investors understand what to do (learn more here).

Consequently, it’s important to take a gander at the latest action encompassing FairPoint Communications Inc (NASDAQ:FRP).

How have hedgies been trading FairPoint Communications Inc (NASDAQ:FRP)?

At Q1’s end, a total of 11 of the hedge funds we track were long in this stock, a change of -8% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes substantially.

When looking at the hedgies we track, John M. Angelo and Michael L. Gordon’s Angelo Gordon & Co had the biggest position in FairPoint Communications Inc (NASDAQ:FRP), worth close to $38.3 million, accounting for 2.5% of its total 13F portfolio. On Angelo Gordon & Co’s heels is Anchorage Advisors, managed by Kevin Michael Ulrich, which held a $19.1 million position; 1.2% of its 13F portfolio is allocated to the stock. Other hedge funds with similar optimism include Eric Edidin and Josh Lobel’s Archer Capital Management, John Paulson’s Paulson & Co and Howard Guberman’s Gruss Asset Management.

Because FairPoint Communications Inc (NASDAQ:FRP) has experienced declining sentiment from hedge fund managers, logic holds that there were a few money managers that slashed their full holdings in Q1. Interestingly, Israel Englander’s Millennium Management cut the biggest position of the “upper crust” of funds we track, comprising an estimated $0.1 million in stock. These transactions are important to note, as aggregate hedge fund interest fell by 1 funds in Q1.

Insider trading activity in FairPoint Communications Inc (NASDAQ:FRP)

Insider buying is particularly usable when the primary stock in question has seen transactions within the past six months. Over the latest 180-day time period, FairPoint Communications Inc (NASDAQ:FRP) has experienced 1 unique insiders purchasing, and 1 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to FairPoint Communications Inc (NASDAQ:FRP). These stocks are EarthLink, Inc. (NASDAQ:ELNK), Alaska Communications Systems Group Inc (NASDAQ:ALSK), Shenandoah Telecommunications Company (NASDAQ:SHEN), Hickory Tech Corporation (NASDAQ:HTCO), and magicJack VocalTec Ltd (NASDAQ:CALL). All of these stocks are in the telecom services – domestic industry and their market caps match FRP’s market cap.

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