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NII Holdings, Inc. (NIHD): This Indicator Says You Should Sell Ubiquiti Networks Inc (UBNT)

Is Ubiquiti Networks Inc (NASDAQ:UBNT) a good investment now? The smart money is in a pessimistic mood. The number of long hedge fund bets were trimmed by 3 lately.

In the 21st century investor’s toolkit, there are plenty of gauges shareholders can use to track stocks. Two of the most underrated are hedge fund and insider trading interest. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the elite fund managers can outperform the broader indices by a healthy amount (see just how much).

Just as integral, positive insider trading sentiment is another way to parse down the world of equities. Obviously, there are many reasons for a bullish insider to cut shares of his or her company, but only one, very simple reason why they would behave bullishly. Plenty of academic studies have demonstrated the market-beating potential of this method if piggybackers understand where to look (learn more here).

With these “truths” under our belt, let’s take a glance at the latest action encompassing Ubiquiti Networks Inc (NASDAQ:UBNT).

How have hedgies been trading Ubiquiti Networks Inc (NASDAQ:UBNT)?

At the end of the fourth quarter, a total of 6 of the hedge funds we track held long positions in this stock, a change of -33% from the previous quarter. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their holdings considerably.

Of the funds we track, Stadium Capital Management, managed by Alexander Medina Seaver, holds the most valuable position in Ubiquiti Networks Inc (NASDAQ:UBNT). Stadium Capital Management has a $7 million position in the stock, GOTHAM ASSET MANAGEMENTcomprising 1.8% of its 13F portfolio. On Stadium Capital Management’s heels is Joel Greenblatt of Gotham Asset Management, with a $2 million position; 1.8% of its 13F portfolio is allocated to the stock. Remaining hedge funds that are bullish include D. E. Shaw’s D E Shaw, and Israel Englander’s Millennium Management.

Since Ubiquiti Networks Inc (NASDAQ:UBNT) has faced falling interest from the smart money, it’s easy to see that there exists a select few fund managers who sold off their full holdings in Q4. Intriguingly, James H. Litinsky’s JHL Capital Group cut the largest position of the 450+ funds we watch, worth about $15 million in stock.. Mike Vranos’s fund, Ellington, also dropped its stock, about $0 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 3 funds in Q4.

What do corporate executives and insiders think about Ubiquiti Networks Inc (NASDAQ:UBNT)?

Insider trading activity, especially when it’s bullish, is most useful when the primary stock in question has seen transactions within the past 180 days. Over the latest half-year time period, Ubiquiti Networks Inc (NASDAQ:UBNT) has seen zero unique insiders buying, and 6 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Ubiquiti Networks Inc (NASDAQ:UBNT). These stocks are Telephone & Data Systems, Inc. (NYSE:TDS), InterDigital, Inc. (NASDAQ:IDCC), NII Holdings, Inc. (NASDAQ:NIHD), Cellcom Israel Ltd. (NYSE:CEL), and Partner Communications Company Ltd (ADR) (NASDAQ:PTNR). This group of stocks are in the wireless communications industry and their market caps resemble UBNT’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Telephone & Data Systems, Inc. (NYSE:TDS) 14 0 2
InterDigital, Inc. (NASDAQ:IDCC) 16 0 5
NII Holdings, Inc. (NASDAQ:NIHD) 18 0 0
Cellcom Israel Ltd. (NYSE:CEL) 9 0 0
Partner Communications Company Ltd (ADR) (NASDAQ:PTNR) 7 0 0

With the returns exhibited by the aforementioned research, retail investors should always pay attention to hedge fund and insider trading sentiment, and Ubiquiti Networks Inc (NASDAQ:UBNT) is an important part of this process.

Click here to learn why you should track hedge funds