Harmonic Inc (NASDAQ:HLIT) shareholders have witnessed a decrease in hedge fund sentiment recently.
According to most market participants, hedge funds are assumed to be unimportant, outdated financial vehicles of yesteryear. While there are greater than 8000 funds with their doors open today, we at Insider Monkey look at the aristocrats of this club, about 450 funds. Most estimates calculate that this group controls the majority of the smart money’s total capital, and by keeping an eye on their highest performing picks, we have identified a few investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per year 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 (see all of our picks from August).
Equally as beneficial, bullish insider trading sentiment is another way to parse down the financial markets. Obviously, there are a number of reasons for an executive to get rid of shares of his or her company, but only one, very obvious reason why they would buy. Various empirical studies have demonstrated the market-beating potential of this tactic if shareholders understand where to look (learn more here).
With these “truths” under our belt, we’re going to take a gander at the recent action surrounding Harmonic Inc (NASDAQ:HLIT).
How have hedgies been trading Harmonic Inc (NASDAQ:HLIT)?
At the end of the fourth quarter, a total of 11 of the hedge funds we track were bullish in this stock, a change of 0% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes significantly.
When looking at the hedgies we track, Chuck Royce’s Royce & Associates had the most valuable position in Harmonic Inc (NASDAQ:HLIT), worth close to $14.3 million, comprising less than 0.1%% of its total 13F portfolio. Coming in second is Cliff Asness of AQR Capital Management, with a $2.5 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedgies with similar optimism include Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Israel Englander’s Millennium Management and Jim Simons’s Renaissance Technologies.
Since Harmonic Inc (NASDAQ:HLIT) has faced falling interest from the aggregate hedge fund industry, logic holds that there were a few funds that elected to cut their entire stakes heading into 2013. At the top of the heap, D. E. Shaw’s D E Shaw said goodbye to the biggest position of the “upper crust” of funds we watch, valued at close to $0.3 million in stock.. Philip Hempleman’s fund, Ardsley Partners, also cut its stock, about $0.1 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
How have insiders been trading Harmonic Inc (NASDAQ:HLIT)?
Insider trading activity, especially when it’s bullish, is best served when the company we’re looking at has seen transactions within the past 180 days. Over the latest half-year time period, Harmonic Inc (NASDAQ:HLIT) has seen zero 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 Harmonic Inc (NASDAQ:HLIT). These stocks are 8×8, Inc. (NASDAQ:EGHT), Infinera Corp. (NASDAQ:INFN), Vocera Communications Inc (NYSE:VCRA), Tellabs, Inc. (NASDAQ:TLAB), and Sonus Networks, Inc. (NASDAQ:SONS). All of these stocks are in the communication equipment industry and their market caps resemble HLIT’s market cap.