Hedge Funds Are Selling Frontier Communications Corp (NASDAQ:FTR)

Frontier Communications Corp (NASDAQ:FTR) shareholders have witnessed a decrease in hedge fund interest of late.

According to most traders, hedge funds are viewed as slow, old financial vehicles of years past. While there are more than 8000 funds trading at the moment, we at Insider Monkey choose to focus on the bigwigs of this club, around 450 funds. It is widely believed that this group oversees the majority of the hedge fund industry’s total asset base, and by monitoring their highest performing equity investments, we have unsheathed a number of investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outstripped 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 topped the S&P 500 index by 25 percentage points in 6.5 month (see the details here).

Just as key, bullish insider trading sentiment is a second way to parse down the investments you’re interested in. Just as you’d expect, there are a number of stimuli for an executive to cut shares of his or her company, but only one, very simple reason why they would behave bullishly. Various academic studies have demonstrated the impressive potential of this method if investors understand where to look (learn more here).

With all of this in mind, we’re going to take a gander at the key action encompassing Frontier Communications Corp (NASDAQ:FTR).

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

At year’s end, a total of 16 of the hedge funds we track were bullish in this stock, a change of 0% from the third quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their stakes meaningfully.

Of the funds we track, Phill Gross and Robert Atchinson’s Adage Capital Management had the biggest position in Frontier Communications Corp (NASDAQ:FTR), worth close to $150 million, accounting for 0.5% of its total 13F portfolio. On Adage Capital Management’s heels is Prem Watsa of Fairfax Financial Holdings, with a $69 million position; 0.1% of its 13F portfolio is allocated to the company. Some other hedge funds with similar optimism include Bernard Horn’s Polaris Capital Management, Chase Coleman’s Tiger Global Management LLC and Paul Tudor Jones’s Tudor Investment Corp.

Judging by the fact that Frontier Communications Corp (NASDAQ:FTR) has experienced a declination in interest from hedge fund managers, we can see that there were a few hedgies that decided to sell off their entire stakes heading into 2013. Interestingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital cut the biggest position of the 450+ funds we monitor, valued at close to $7 million in stock.. Richard Schimel’s fund, Diamondback Capital, also dropped its stock, about $3 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Insider trading activity in Frontier Communications Corp (NASDAQ:FTR)

Insider trading activity, especially when it’s bullish, is particularly usable when the primary stock in question has seen transactions within the past six months. Over the last half-year time frame, Frontier Communications Corp (NASDAQ:FTR) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).

With the returns exhibited by Insider Monkey’s research, everyday investors must always keep an eye on hedge fund and insider trading sentiment, and Frontier Communications Corp (NASDAQ:FTR) is no exception.

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Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.