Hedge Funds Aren’t Crazy About Oi SA (ADR) (OIBR) Anymore

Oi SA (ADR) (NYSE:OIBR) has seen a decrease in hedge fund interest lately.

In the eyes of most investors, hedge funds are perceived as unimportant, outdated investment vehicles of yesteryear. While there are more than 8000 funds trading today, we look at the masters of this group, around 450 funds. Most estimates calculate that this group oversees the lion’s share of the smart money’s total capital, and by tracking their top equity investments, we have brought to light a number of investment strategies that have historically outstripped the S&P 500 index. 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 trumped the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Just as important, positive insider trading activity is another way to break down the world of equities. There are a number of stimuli for an executive to get rid of shares of his or her company, but just one, very obvious reason why they would buy. Many empirical studies have demonstrated the useful potential of this strategy if “monkeys” know what to do (learn more here).

Now, let’s take a peek at the key action encompassing Oi SA (ADR) (NYSE:OIBR).

Hedge fund activity in Oi SA (ADR) (NYSE:OIBR)

At the end of the first quarter, a total of 5 of the hedge funds we track were bullish in this stock, a change of -17% from one quarter earlier. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings considerably.

Of the funds we track, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the most valuable position in Oi SA (ADR) (NYSE:OIBR). Arrowstreet Capital has a $13.1 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by Harvard Management Co, managed by Jane Mendillo, which held a $3 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other hedge funds that hold long positions include Jim Simons’s Renaissance Technologies, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Jim Simons’s Renaissance Technologies.

Since Oi SA (ADR) (NYSE:OIBR) has experienced bearish sentiment from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of hedge funds that elected to cut their positions entirely heading into Q2. It’s worth mentioning that Israel Englander’s Millennium Management said goodbye to the biggest stake of all the hedgies we track, comprising about $12.5 million in stock., and Ken Griffin of Citadel Investment Group was right behind this move, as the fund cut about $0.5 million worth. These transactions are important to note, as total hedge fund interest fell by 1 funds heading into Q2.

Insider trading activity in Oi SA (ADR) (NYSE:OIBR)

Insider buying is particularly usable when the primary stock in question has experienced transactions within the past six months. Over the last six-month time frame, Oi SA (ADR) (NYSE:OIBR) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Oi SA (ADR) (NYSE:OIBR). These stocks are Vonage Holdings Corp. (NYSE:VG), Level 3 Communications, Inc. (NYSE:LVLT), Neustar Inc (NYSE:NSR), Telecom Argentina S.A. (ADR) (NYSE:TEO), and Cogent Communications Group, Inc. (NASDAQ:CCOI). This group of stocks are in the diversified communication services industry and their market caps match OIBR’s market cap.

With the returns exhibited by our tactics, everyday investors must always keep an eye on hedge fund and insider trading sentiment, and Oi SA (ADR) (NYSE:OIBR) shareholders fit into this picture quite nicely.

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