Infinera Corp. (NASDAQ:INFN) has seen an increase in hedge fund interest lately.
If you’d ask most traders, hedge funds are viewed as underperforming, old investment tools of the past. While there are greater than 8000 funds trading today, we hone in on the top tier of this club, close to 450 funds. It is estimated that this group oversees most of the hedge fund industry’s total capital, and by tracking their best investments, we have determined a few investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).
Equally as beneficial, optimistic insider trading sentiment is a second way to break down the world of equities. There are lots of incentives for an insider to downsize shares of his or her company, but just one, very clear reason why they would initiate a purchase. Several empirical studies have demonstrated the market-beating potential of this method if piggybackers understand what to do (learn more here).
With these “truths” under our belt, let’s take a look at the key action surrounding Infinera Corp. (NASDAQ:INFN).
What does the smart money think about Infinera Corp. (NASDAQ:INFN)?
At the end of the fourth quarter, a total of 8 of the hedge funds we track were bullish in this stock, a change of 14% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes significantly.
Of the funds we track, Kerr Neilson’s Platinum Asset Management had the biggest position in Infinera Corp. (NASDAQ:INFN), worth close to $44.4 million, accounting for 1% of its total 13F portfolio. On Platinum Asset Management’s heels is Chuck Royce of Royce & Associates, with a $9.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedgies that are bullish include Brian Ashford-Russell and Tim Woolley’s Polar Capital, Ken Griffin’s Citadel Investment Group and Mike Vranos’s Ellington.
As aggregate interest increased, key hedge funds were leading the bulls’ herd. Ellington, managed by Mike Vranos, established the largest position in Infinera Corp. (NASDAQ:INFN). Ellington had 0.3 million invested in the company at the end of the quarter. Steven Cohen’s SAC Capital Advisors also made a $0.1 million investment in the stock during the quarter.
What have insiders been doing with Infinera Corp. (NASDAQ:INFN)?
Insider buying is at its handiest when the company we’re looking at has seen transactions within the past 180 days. Over the latest 180-day time period, Infinera Corp. (NASDAQ:INFN) has experienced 1 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 Infinera Corp. (NASDAQ:INFN). These stocks are ADTRAN, Inc. (NASDAQ:ADTN), Vocera Communications Inc (NYSE:VCRA), Harmonic Inc (NASDAQ:HLIT), Sonus Networks, Inc. (NASDAQ:SONS), and Tellabs, Inc. (NASDAQ:TLAB). This group of stocks are in the communication equipment industry and their market caps match INFN’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| ADTRAN, Inc. (NASDAQ:ADTN) | 6 | 0 | 1 |
| Vocera Communications Inc (NYSE:VCRA) | 9 | 0 | 13 |
| Harmonic Inc (NASDAQ:HLIT) | 11 | 0 | 1 |
| Sonus Networks, Inc. (NASDAQ:SONS) | 10 | 1 | 1 |
| Tellabs, Inc. (NASDAQ:TLAB) | 15 | 0 | 0 |
With the results shown by our time-tested strategies, retail investors should always monitor hedge fund and insider trading sentiment, and Infinera Corp. (NASDAQ:INFN) shareholders fit into this picture quite nicely.
