Nuance Communications Inc. (NASDAQ:NUAN): Are Hedge Funds Right About This Stock?

Nuance Communications Inc. (NASDAQ:NUAN) was in 17 hedge funds’ portfolio at the end of the fourth quarter of 2012. NUAN has seen a decrease in activity from the world’s largest hedge funds recently. There were 21 hedge funds in our database with NUAN holdings at the end of the previous quarter.

Nuance Communications Inc. (NASDAQ:NUAN)

In the 21st century investor’s toolkit, there are tons of indicators market participants can use to analyze their holdings. A pair of the most underrated are hedge fund and insider trading activity. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the elite money managers can outperform the broader indices by a superb amount (see just how much).

Equally as key, bullish insider trading activity is a second way to parse down the world of equities. As the old adage goes: there are a variety of incentives for a corporate insider to drop shares of his or her company, but just one, very obvious reason why they would behave bullishly. Several empirical studies have demonstrated the useful potential of this tactic if “monkeys” understand what to do (learn more here).

With all of this in mind, we’re going to take a gander at the latest action encompassing Nuance Communications Inc. (NASDAQ:NUAN).

Hedge fund activity in Nuance Communications Inc. (NASDAQ:NUAN)

At year’s end, a total of 17 of the hedge funds we track were bullish in this stock, a change of -19% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their holdings substantially.

When looking at the hedgies we track, Renaissance Technologies, managed by Jim Simons, holds the largest position in Nuance Communications Inc. (NASDAQ:NUAN). Renaissance Technologies has a $36 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is PAR Capital Management, managed by Paul Reeder and Edward Shapiro, which held a $28 million position; the fund has 1.2% of its 13F portfolio invested in the stock. Some other hedgies with similar optimism include Seymour Sy Kaufman and Michael Stark’s Crosslink Capital, William Harnisch’s Peconic Partners LLC and Bill Miller’s Legg Mason Capital Management.

Since Nuance Communications Inc. (NASDAQ:NUAN) has experienced a declination in interest from the smart money, it’s safe to say that there were a few funds that slashed their entire stakes at the end of the year. At the top of the heap, Christopher Lord’s Criterion Capital cut the largest stake of all the hedgies we monitor, comprising an estimated $26 million in stock.. Joe DiMenna’s fund, ZWEIG DIMENNA PARTNERS, also dropped its stock, about $7 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 4 funds at the end of the year.

How have insiders been trading Nuance Communications Inc. (NASDAQ:NUAN)?

Insider purchases made by high-level executives is particularly usable when the company in question has experienced transactions within the past six months. Over the last 180-day time period, Nuance Communications Inc. (NASDAQ:NUAN) has experienced zero unique insiders purchasing, and 6 insider sales (see the details of insider trades here).

With the results demonstrated by the aforementioned time-tested strategies, everyday investors should always watch hedge fund and insider trading activity, and Nuance Communications Inc. (NASDAQ:NUAN) is an important part of this process.

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