The steadily-declining unemployment rate and the strengthening U.S economy have been acting as tailwinds for the public utilities sector lately. Moreover, the wireless and Voice over Internet Protocol (VoIP) services have been leaving traditional telephone networks in their dust, so the public utilities sector and the telecom sub-sector in particular have been shaped by new technology and innovation. In the following article we will provide a list of five low-priced public utilities stocks that the elite hedge funds tracked by Insider Monkey have been piling into lately. However, it is worth noting that most of these five stocks can be categorized as telecom stocks.
But why do we track hedge fund activities? From one point of view we can argue that hedge funds are consistently underperforming when it comes to net returns over the last three years, when compared to the S&P 500. But that doesn’t mean that we should completely neglect the hedge funds’ activities. There are various reasons behind the low hedge fund returns. Our research indicated that hedge funds’ long positions actually beat the market. In our back-tests covering the 1999-2012 period hedge funds’ top small cap stocks edged the S&P 500 index by double digits annually. The 15 most popular small cap stock picks among hedge funds also bested passive index funds by around 60 percentage points over the 36 month period beginning in September 2012, delivering returns of 118% (read the details here).
5. ShoreTel Inc (NASDAQ:SHOR)
Investors with Long Positions (as of June 30): 21
Aggregate Value of Investors’ Holdings (as of June 30): $115.94 Million
The number of hedge funds observed by our team holding stakes in ShoreTel Inc (NASDAQ:SHOR) decreased by one during the June quarter. Even so, the value of their holdings grew by $7.32 million over this period. It is also worth mentioning that these hedge funds own approximately 26.50% of the company’s outstanding shares as of June 30, which suggests money managers’ confidence in the stock. ShoreTel’s stock performance has included numerous ups-and-downs throughout the year, with the end result being that its shares have managed to deliver a return of slightly over 1% year-to-date. The provider of business communication solutions delivered relatively strong financial results in the most recent quarter, and expects its revenue to be in the range of $86 million-to-$91 million for the current financial quarter. Jim Simons’ Renaissance Technologies reported owning 1.43 million shares of ShoreTel Inc (NASDAQ:SHOR) as of June 30.