Hedge Funds Are Selling Harmonic Inc (HLIT)

Harmonic Inc (NASDAQ:HLIT) was in 9 hedge funds’ portfolio at the end of March. HLIT shareholders have witnessed a decrease in hedge fund interest recently. There were 11 hedge funds in our database with HLIT positions at the end of the previous quarter.

If you’d ask most market participants, hedge funds are seen as unimportant, old financial vehicles of yesteryear. While there are over 8000 funds in operation at present, we hone in on the leaders of this group, about 450 funds. It is widely believed that this group oversees the majority of all hedge funds’ total capital, and by watching their highest performing stock picks, we have determined a number of investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum 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 outclassed the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Equally as key, positive insider trading sentiment is a second way to break down the marketplace. There are lots of reasons for an executive to drop shares of his or her company, but just one, very simple reason why they would buy. Many empirical studies have demonstrated the useful potential of this method if piggybackers understand what to do (learn more here).

Consequently, let’s take a gander at the recent action surrounding Harmonic Inc (NASDAQ:HLIT).

What have hedge funds been doing with Harmonic Inc (NASDAQ:HLIT)?

Heading into Q2, a total of 9 of the hedge funds we track were long in this stock, a change of -18% from one quarter earlier. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were boosting their stakes considerably.

When looking at the hedgies we track, Chuck Royce’s Royce & Associates had the largest position in Harmonic Inc (NASDAQ:HLIT), worth close to $14.9 million, accounting for less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which held a $4.5 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedgies that are bullish include Cliff Asness’s AQR Capital Management, Israel Englander’s Millennium Management and Jim Simons’s Renaissance Technologies.

Due to the fact that Harmonic Inc (NASDAQ:HLIT) has witnessed bearish sentiment from hedge fund managers, it’s easy to see that there lies a certain “tier” of money managers who were dropping their entire stakes at the end of the first quarter. Intriguingly, Peter Algert and Kevin Coldiron’s Algert Coldiron Investors dropped the biggest position of the 450+ funds we key on, totaling close to $0.8 million in stock., and Neil Chriss of Hutchin Hill Capital was right behind this move, as the fund sold off about $0.2 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 2 funds at the end of the first quarter.

How have insiders been trading Harmonic Inc (NASDAQ:HLIT)?

Insider trading activity, especially when it’s bullish, is particularly usable when the primary stock in question has seen transactions within the past 180 days. Over the last 180-day time period, Harmonic Inc (NASDAQ:HLIT) has experienced zero unique insiders purchasing, and 1 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Harmonic Inc (NASDAQ:HLIT). These stocks are 8×8, Inc. (NASDAQ:EGHT), Infinera Corp. (NASDAQ:INFN), Vocera Communications Inc (NYSE:VCRA), Tellabs, Inc. (NASDAQ:TLAB), and Sonus Networks, Inc. (NASDAQ:SONS). This group of stocks are in the communication equipment industry and their market caps are similar to HLIT’s market cap.

With the results exhibited by the aforementioned strategies, retail investors must always watch hedge fund and insider trading activity, and Harmonic Inc (NASDAQ:HLIT) applies perfectly to this mantra.

Click here to learn why you should track hedge funds