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Should You Buy Frontier Communications Corp (FTR)?

Is Frontier Communications Corp (NASDAQ:FTR) a good investment?

If you were to ask many of your peers, hedge funds are perceived as overrated, outdated investment vehicles of a forgotten age. Although there are over 8,000 hedge funds in operation currently, this site looks at the moguls of this club, around 525 funds. Analysts calculate that this group controls the lion’s share of all hedge funds’ total capital, and by watching their highest quality equity investments, we’ve determined a number of investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually 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 outpaced the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).

Frontier Communications Corp (NASDAQ:FTR)

Just as useful, bullish insider trading sentiment is another way to look at the financial markets. Just as you’d expect, there are many stimuli for an upper level exec to cut shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Many academic studies have demonstrated the useful potential of this strategy if shareholders understand where to look (learn more here).

Keeping this in mind, let’s study the latest info surrounding Frontier Communications Corp (NASDAQ:FTR).

What have hedge funds been doing with Frontier Communications Corp (NASDAQ:FTR)?

At the end of the second quarter, a total of 21 of the hedge funds we track were long in this stock, a change of 17% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their stakes substantially.

According to our 13F database, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the biggest position in Frontier Communications Corp (NASDAQ:FTR). Adage Capital Management has a $153.2 million position in the stock, comprising 0.5% of its 13F portfolio. On Adage Capital Management’s heels is Bernard Horn of Polaris Capital Management, with a $50.9 million position; 2.9% of its 13F portfolio is allocated to the company. Some other hedge funds that are bullish include Ken Griffin’s Citadel Investment Group, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Richard L. Haydon’s Yield Capital Partners (Y/Cap Management).

Now, specific money managers have jumped into Frontier Communications Corp (NASDAQ:FTR) headfirst. Adage Capital Management, managed by Phill Gross and Robert Atchinson, initiated the largest position in Frontier Communications Corp (NASDAQ:FTR). Adage Capital Management had 153.2 million invested in the company at the end of the quarter. Bernard Horn’s Polaris Capital Management also made a $50.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Ken Griffin’s Citadel Investment Group, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Richard L. Haydon’s Yield Capital Partners (Y/Cap Management).

How have insiders been trading Frontier Communications Corp (NASDAQ:FTR)?

Legal insider trading, particularly when it’s bullish, is most useful when the company in focus has seen transactions within the past 180 days. Over the latest half-year time period, Frontier Communications Corp (NASDAQ:FTR) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

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

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