In the hedge fund universe, billionaire Carl Icahn’s hedge fund Icahn Capital increased its stake in Nuance Communications Inc. (NASDAQ:NUAN), a 13D filing with the SEC showed. Overall, the hedge fund now owns about 52.4 million shares of the company, the value of the stake amounting to over $1.0 billion. Through the acquisition, Icahn solidified its position as the largest shareholder of Nuance Communications Inc. (NASDAQ:NUAN). In the latest round of 13F filings with the Securities and Exchange Commission, Icahn Capital’s stake in Nuance Communications contained about 31.5 million shares, surging by more than 27.7 million shares over the quarter. Carl Icahn’s hedge fund, added the company to its equity portfolio in the first quarter of 2013 by purchasing 3.8 million shares.
If you were to ask many of your peers, hedge funds are perceived as delayed, outdated investment vehicles of a forgotten age. Although there are more than 8,000 hedge funds trading currently, Insider Monkey focuses on the upper echelon of this group, about 525 funds. It is assumed that this group has its hands on the lion’s share of the hedge fund industry’s total capital, and by monitoring their highest performing investments, we’ve uncovered a few investment strategies that have historically outpaced the S&P 500. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points annually 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 outperformed the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).
Equally as key, bullish insider trading activity is a second way to look at the stock market universe. As the old adage goes: there are lots of stimuli for a bullish insider to sell shares of his or her company, but just one, very clear reason why they would initiate a purchase. Several academic studies have demonstrated the market-beating potential of this strategy if piggybackers know what to do (learn more here).
Furthermore, we’re going to analyze the newest info for Nuance Communications Inc. (NASDAQ:NUAN).
How have hedgies been trading Nuance Communications Inc. (NASDAQ:NUAN)?
At the end of the second quarter, a total of 25 of the hedge funds we track held long positions in this stock, a change of 25% from the previous quarter. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were upping their stakes meaningfully.
In addition to Icahn, who, as we mentioned above, holds the largest position in the company, sitting at the No. 2 spot is Coatue Management, managed by Philippe Laffont, which held a $36.9 million position; 0.4% of its 13F portfolio is allocated to the company. Other hedge funds with similar optimism include James Crichton and Adam Weiss’s Scout Capital Management, Ken Griffin’s Citadel Investment Group and Israel Englander’s Millennium Management.
Consequently, certain money managers have been driving this bullishness. Philippe Laffont’s Coatue Management also made a $36.9 million investment in the stock during the quarter. The following funds were also among the new NUAN investors: James Crichton and Adam Weiss’s Scout Capital Management, George Soros’s Soros Fund Management, and Ken Griffin’s Citadel Investment Group.
What have insiders been doing with Nuance Communications Inc. (NASDAQ:NUAN)?
Legal insider trading, particularly when it’s bullish, is best served when the company in focus has experienced transactions within the past half-year. Over the last six-month time frame, Nuance Communications Inc. (NASDAQ:NUAN) has seen 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 Nuance Communications Inc. (NASDAQ:NUAN). These stocks are Msci Inc (NYSE:MSCI), Red Hat, Inc. (NYSE:RHT), SolarWinds Inc (NYSE:SWI), F5 Networks, Inc. (NASDAQ:FFIV), and BMC Software, Inc. (NASDAQ:BMC). This group of stocks belong to the application software industry and their market caps match NUAN’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Msci Inc (NYSE:MSCI) | 16 | 0 | 0 |
| Red Hat, Inc. (NYSE:RHT) | 30 | 0 | 0 |
| SolarWinds Inc (NYSE:SWI) | 20 | 0 | 0 |
| F5 Networks, Inc. (NASDAQ:FFIV) | 28 | 0 | 0 |
| BMC Software, Inc. (NASDAQ:BMC) | 40 | 0 | 0 |
Using the results explained by Insider Monkey’s strategies, regular investors must always watch hedge fund and insider trading activity, and Nuance Communications Inc. (NASDAQ:NUAN) shareholders fit into this picture quite nicely.
