Is Pendrell Corporation – Class A (NASDAQ:PCO) a safe investment now? Prominent investors are in a pessimistic mood. The number of bullish hedge fund bets stayed the same which is a slightly negative development in our experience
To most investors, hedge funds are viewed as underperforming, outdated investment vehicles of years past. While there are more than 8000 funds in operation today, we at Insider Monkey hone in on the top tier of this club, around 450 funds. It is estimated that this group controls the lion’s share of the smart money’s total asset base, and by watching their best equity investments, we have revealed a number of investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy outpaced 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 beaten the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).
Equally as integral, positive insider trading sentiment is a second way to break down the stock market universe. Obviously, there are many reasons for an insider to cut shares of his or her company, but just one, very obvious reason why they would behave bullishly. Plenty of academic studies have demonstrated the market-beating potential of this strategy if piggybackers know what to do (learn more here).
With all of this in mind, we’re going to take a gander at the latest action surrounding Pendrell Corporation – Class A (NASDAQ:PCO).
How have hedgies been trading Pendrell Corporation – Class A (NASDAQ:PCO)?
At year’s end, a total of 10 of the hedge funds we track were long in this stock, a change of 0% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their stakes considerably.
Of the funds we track, James Dondero’s Highland Capital Management had the biggest position in Pendrell Corporation – Class A (NASDAQ:PCO), worth close to $57.9 million, comprising 5.7% of its total 13F portfolio. Sitting at the No. 2 spot is Steelhead Partners, managed by Michael Johnston, which held a $8.1 million position; 0.6% of its 13F portfolio is allocated to the company. Some other hedgies that are bullish include John Kleinheinz’s Kleinheinz Capital Partners, Thomas Steyer’s Farallon Capital and John W. Rogers’s Ariel Investments.
Because Pendrell Corporation – Class A (NASDAQ:PCO) has faced a declination in interest from hedge fund managers, we can see that there were a few hedge funds that slashed their positions entirely last quarter. Intriguingly, Curtis Schenker and Craig Effron’s Scoggin said goodbye to the largest position of all the hedgies we watch, valued at close to $0.3 million in stock. These moves are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
How are insiders trading Pendrell Corporation – Class A (NASDAQ:PCO)?
Insider purchases made by high-level executives is best served when the company we’re looking at has experienced transactions within the past half-year. Over the last six-month time period, Pendrell Corporation – Class A (NASDAQ:PCO) has seen zero unique insiders purchasing, and 1 insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to Pendrell Corporation – Class A (NASDAQ:PCO). These stocks are NTELOS Holdings Corp. (NASDAQ:NTLS), Maxcom Telecomunic S.A.B. de C.V. (ADR) (NYSE:MXT), USA Mobility Inc (NASDAQ:USMO), Leap Wireless International, Inc. (NASDAQ:LEAP), and UTStarcom Holdings Corp (NASDAQ:UTSI). This group of stocks are the members of the wireless communications industry and their market caps are similar to PCO’s market cap.