FairPoint Communications Inc (NASDAQ:FRP) investors should be aware of an increase in support from the world’s most elite money managers in recent months.
According to most traders, hedge funds are viewed as underperforming, old financial tools of the past. While there are greater than 8000 funds with their doors open at present, we hone in on the bigwigs of this club, about 450 funds. Most estimates calculate that this group has its hands on the lion’s share of all hedge funds’ total capital, and by keeping an eye on their top picks, we have brought to light a number of investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).
Equally as key, bullish insider trading sentiment is another way to parse down the marketplace. Obviously, there are lots of reasons for a corporate insider to sell shares of his or her company, but only one, very clear reason why they would buy. Plenty of empirical studies have demonstrated the useful potential of this tactic if shareholders know what to do (learn more here).
Now, it’s important to take a glance at the recent action encompassing FairPoint Communications Inc (NASDAQ:FRP).
How are hedge funds trading FairPoint Communications Inc (NASDAQ:FRP)?
At year’s end, a total of 12 of the hedge funds we track were long in this stock, a change of 9% from the third quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their holdings 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 $40.8 million, comprising 3.7% of its total 13F portfolio. On Angelo Gordon & Co’s heels is Anchorage Advisors, managed by Kevin Michael Ulrich, which held a $20.3 million position; 0.7% of its 13F portfolio is allocated to the company. Some other hedgies that hold long positions include Eric Edidin and Josh Lobel’s Archer Capital Management, John Paulson’s Paulson & Co and Howard Guberman’s Gruss Asset Management.
Now, some big names were leading the bulls’ herd. Millennium Management, managed by Israel Englander, assembled the most outsized position in FairPoint Communications Inc (NASDAQ:FRP). Millennium Management had 0.1 million invested in the company at the end of the quarter.
How are insiders trading FairPoint Communications Inc (NASDAQ:FRP)?
Insider purchases made by high-level executives is particularly usable when the company in question has experienced transactions within the past half-year. Over the latest half-year time period, FairPoint Communications Inc (NASDAQ:FRP) has seen zero unique insiders buying, and 1 insider sales (see the details of insider trades here).
Let’s also examine 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). This group of stocks are the members of the telecom services – domestic industry and their market caps are similar to FRP’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|EarthLink, Inc. (NASDAQ:ELNK)||15||0||0|
|Alaska Communications Systems Group Inc (NASDAQ:ALSK)||4||1||1|
|Shenandoah Telecommunications Company (NASDAQ:SHEN)||2||2||0|
|Hickory Tech Corporation (NASDAQ:HTCO)||2||0||2|
|magicJack VocalTec Ltd (NASDAQ:CALL)||7||0||1|
With the results demonstrated by our tactics, everyday investors must always pay attention to hedge fund and insider trading sentiment, and FairPoint Communications Inc (NASDAQ:FRP) applies perfectly to this mantra.