Is BCE Inc. (USA) (BCE) Going to Burn These Hedge Funds?

BCE Inc. (USA) (NYSE:BCE) has experienced a decrease in activity from the world’s largest hedge funds lately.

In the eyes of most stock holders, hedge funds are assumed to be slow, outdated financial vehicles of yesteryear. While there are greater than 8000 funds with their doors open at the moment, we hone in on the upper echelon of this club, around 450 funds. It is widely believed that this group has its hands on the lion’s share of the smart money’s total capital, and by paying attention to their best stock picks, we have discovered a few investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy outpaced 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 beaten the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).

Equally as key, positive insider trading activity is another way to break down the stock market universe. Just as you’d expect, there are plenty of motivations for a corporate insider to drop shares of his or her company, but just one, very obvious reason why they would behave bullishly. Plenty of empirical studies have demonstrated the useful potential of this method if shareholders know what to do (learn more here).

With all of this in mind, it’s important to take a peek at the recent action surrounding BCE Inc. (USA) (NYSE:BCE).

How are hedge funds trading BCE Inc. (USA) (NYSE:BCE)?

Heading into 2013, a total of 8 of the hedge funds we track held long positions in this stock, a change of -43% from the previous quarter. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were upping their holdings substantially.

Of the funds we track, Jim Simons’s Renaissance Technologies had the biggest position in BCE Inc. (USA) (NYSE:BCE), worth close to $33.4 million, comprising 0.1% of its total 13F portfolio. On Renaissance Technologies’s heels is Fairfax Financial Holdings, managed by Prem Watsa, which held a $11.5 million position; 0.5% of its 13F portfolio is allocated to the stock. Some other hedgies that hold long positions include D. E. Shaw’s D E Shaw, Mario Gabelli’s GAMCO Investors and Robert B. Gillam’s McKinley Capital Management.

Since BCE Inc. (USA) (NYSE:BCE) has experienced declining sentiment from hedge fund managers, it’s easy to see that there is a sect of money managers that decided to sell off their positions entirely heading into 2013. Interestingly, Louis Navellier’s Navellier & Associates dumped the biggest investment of all the hedgies we monitor, comprising about $49.2 million in stock., and Ray Dalio of Bridgewater Associates was right behind this move, as the fund cut about $18.9 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 6 funds heading into 2013.

How have insiders been trading BCE Inc. (USA) (NYSE:BCE)?

Insider purchases made by high-level executives is at its handiest when the company we’re looking at has seen transactions within the past half-year. Over the last half-year time period, BCE Inc. (USA) (NYSE:BCE) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to BCE Inc. (USA) (NYSE:BCE). These stocks are Windstream Corporation (NASDAQ:WIN), AT&T Inc. (NYSE:T), Verizon Communications Inc. (NYSE:VZ), CenturyLink, Inc. (NYSE:CTL), and Chunghwa Telecom Co., Ltd (ADR) (NYSE:CHT). This group of stocks are the members of the telecom services – domestic industry and their market caps are similar to BCE’s market cap.

With the returns shown by the aforementioned tactics, retail investors should always pay attention to hedge fund and insider trading sentiment, and BCE Inc. (USA) (NYSE:BCE) applies perfectly to this mantra.

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