Buying When a Long Position Seems Hopeless
The $1.85 billion company Polycom Inc (NASDAQ:PLCM) saw a nice 5.71% boost on Thursday when the $7.5 billion firm Omega Advisors raised their stake in the company to 5.4%. This comes as a major sign of confidence for the company’s investors, because over the last year the stock has seen a 44% drop due to declining fundamentals.
Omega Advisors, and more specifically, the firm’s founder Leon Cooperman, has now increased its stake 70% since the end of 2012. With the stock seeing much better metrics it appears that Cooperman believes that he has found the bottom of the stock, or perhaps he believes that he has found a diamond in the rough. Either way, with such a prestigious firm taking such a large position, in a stock that appears troubled, the mere activity is worth noting.
In my book Taking Charge With Value Investing (McGraw-Hill, 2013), I talk about the importance of unmeasured fundamentals, including insider and institutional activity. I explain that it is always good to follow the smart money, those who may know more than yourself, and then use it as an additional point of research. Because much like an analyst’s call, you don’t want to place all of your eggs in one basket and invest solely on the actions of these individuals. However, it’s always wise to incorporate such trends as a part of your investment research, and to weigh the activity accordingly.
The article Market-Moving Institutional/Insider Moves Worth Noting originally appeared on Fool.com and is written by Brian Nichols.
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