Hedge Funds Are Selling TW Telecom Inc (TWTC)

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Is TW Telecom Inc (NASDAQ:TWTC) a sell?

To many traders, hedge funds are perceived as overrated, old investment tools of a period lost to current times. Although there are over 8,000 hedge funds trading in present day, Insider Monkey looks at the top tier of this group, around 525 funds. It is assumed that this group oversees most of the hedge fund industry’s total assets, and by tracking their highest performing investments, we’ve found a few investment strategies that have historically outperformed Mr. 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 started sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).

Just as crucial, bullish insider trading sentiment is a second way to analyze the financial markets. There are a number of reasons for a bullish insider to sell shares of his or her company, but just one, very simple reason why they would behave bullishly. Several empirical studies have demonstrated the valuable potential of this tactic if piggybackers understand where to look (learn more here).

TW Telecom Inc

Keeping this in mind, it’s important to discuss the recent info for TW Telecom Inc (NASDAQ:TWTC).

How have hedgies been trading TW Telecom Inc (NASDAQ:TWTC)?

At the end of the second quarter, a total of 29 of the hedge funds we track were bullish in this stock, a change of -3% from the previous quarter. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their stakes substantially.

Out of the funds we follow, Southeastern Asset Management, managed by Mason Hawkins, holds the most valuable position in TW Telecom Inc (NASDAQ:TWTC). Southeastern Asset Management has a $327 million position in the stock, comprising 1.6% of its 13F portfolio. The second largest stake is held by Keith Meister of Corvex Capital, with a $255.2 million position; the fund has 4.8% of its 13F portfolio invested in the stock. Some other hedge funds that are bullish include Jim Simons’s Renaissance Technologies, Jonathon Jacobson’s Highfields Capital Management and Doug Silverman and Alexander Klabin’s Senator Investment Group.

Judging by the fact that TW Telecom Inc (NASDAQ:TWTC) has experienced a fall in interest from upper-tier hedge fund managers, it’s easy to see that there exists a select few money managers that elected to cut their full holdings in Q1. Intriguingly, Nick Niell’s Arrowgrass Capital Partners dropped the biggest investment of all the hedgies we track, valued at about $56.3 million in stock, and Jeffrey Jon Berney of TriOaks Capital Management was right behind this move, as the fund dropped about $7.9 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 1 funds in Q1.

How are insiders trading TW Telecom Inc (NASDAQ:TWTC)?

Bullish insider trading is best served when the primary stock in question has experienced transactions within the past 180 days. Over the last half-year time frame, TW Telecom Inc (NASDAQ:TWTC) has experienced zero unique insiders purchasing, and 6 insider sales (see the details of insider trades here).

We’ll check out the relationship between both of these indicators in other stocks similar to TW Telecom Inc (NASDAQ:TWTC). These stocks are CenturyLink, Inc. (NYSE:CTL), Consolidated Communications Holdings Inc (NASDAQ:CNSL), Atlantic Tele-Network, Inc. (NASDAQ:ATNI), Windstream Corporation (NASDAQ:WIN), and Frontier Communications Corp (NASDAQ:FTR). This group of stocks are in the telecom services – domestic industry and their market caps are similar to TWTC’s market cap.

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