Infinera Corp. (NASDAQ:INFN) has seen an increase in hedge fund sentiment lately.
According to most stock holders, hedge funds are viewed as underperforming, outdated financial vehicles of years past. While there are over 8000 funds with their doors open at present, we at Insider Monkey hone in on the leaders of this group, about 450 funds. It is estimated that this group oversees the majority of all hedge funds’ total asset base, and by tracking their best equity investments, we have determined a few investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually 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 24 percentage points in 7 months (explore the details and some picks here).
Just as important, bullish insider trading activity is another way to parse down the stock market universe. Obviously, there are plenty of reasons for a corporate insider to sell shares of his or her company, but just one, very obvious reason why they would behave bullishly. Many academic studies have demonstrated the impressive potential of this method if shareholders know where to look (learn more here).
With all of this in mind, let’s take a look at the latest action regarding Infinera Corp. (NASDAQ:INFN).
What does the smart money think about Infinera Corp. (NASDAQ:INFN)?
In preparation for this year, a total of 8 of the hedge funds we track were bullish in this stock, a change of 14% from the third quarter. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were increasing their stakes significantly.
According to our comprehensive database, Platinum Asset Management, managed by Kerr Neilson, holds the largest position in Infinera Corp. (NASDAQ:INFN). Platinum Asset Management has a $44.4 million position in the stock, comprising 1% of its 13F portfolio. The second largest stake is held by Chuck Royce of Royce & Associates, with a $9.1 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining peers 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, specific money managers have been driving this bullishness. Ellington, managed by Mike Vranos, created the most outsized 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.
Insider trading activity in Infinera Corp. (NASDAQ:INFN)
Insider trading activity, especially when it’s bullish, is particularly usable when the company we’re looking at has experienced transactions within the past half-year. Over the latest half-year time period, Infinera Corp. (NASDAQ:INFN) has seen 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). All of these stocks are in the communication equipment industry and their market caps resemble 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 exhibited by the aforementioned tactics, everyday investors should always keep an eye on hedge fund and insider trading activity, and Infinera Corp. (NASDAQ:INFN) applies perfectly to this mantra.
