Is Iridium Communications Inc. (IRDM) Going to Burn These Hedge Funds?

Is Iridium Communications Inc. (NASDAQ:IRDM) a first-rate investment right now? Prominent investors are taking a pessimistic view. The number of bullish hedge fund positions were cut by 4 in recent months.

In the 21st century investor’s toolkit, there are dozens of indicators market participants can use to analyze the equity markets. A pair of the most under-the-radar are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the best fund managers can outperform their index-focused peers by a solid amount (see just how much).

Just as integral, positive insider trading sentiment is another way to parse down the world of equities. Obviously, there are many stimuli for an executive to drop shares of his or her company, but just one, very simple reason why they would behave bullishly. Various empirical studies have demonstrated the useful potential of this method if “monkeys” understand what to do (learn more here).

With these “truths” under our belt, it’s important to take a peek at the recent action surrounding Iridium Communications Inc. (NASDAQ:IRDM).

What does the smart money think about Iridium Communications Inc. (NASDAQ:IRDM)?

At the end of the first quarter, a total of 7 of the hedge funds we track held long positions in this stock, a change of -36% from the first quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their holdings meaningfully.

Of the funds we track, Royce & Associates, managed by Chuck Royce, holds the biggest position in Iridium Communications Inc. (NASDAQ:IRDM). Royce & Associates has a $7.8 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Whitney Tilson of T2 Partners, with a $2.6 million position; 2.2% of its 13F portfolio is allocated to the stock. Other hedge funds that are bullish include Israel Englander’s Millennium Management, Paul Tudor Jones’s Tudor Investment Corp and Ken Griffin’s Citadel Investment Group.

Seeing as Iridium Communications Inc. (NASDAQ:IRDM) has faced falling interest from the aggregate hedge fund industry, logic holds that there were a few hedgies that decided to sell off their full holdings heading into Q2. At the top of the heap, Jim Simons’s Renaissance Technologies cut the largest position of the 450+ funds we watch, valued at close to $0.3 million in stock., and Matthew Tewksbury of Stevens Capital Management was right behind this move, as the fund dumped about $0.1 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 4 funds heading into Q2.

How are insiders trading Iridium Communications Inc. (NASDAQ:IRDM)?

Bullish insider trading is at its handiest when the company in question has seen transactions within the past 180 days. Over the latest half-year time period, Iridium Communications Inc. (NASDAQ:IRDM) has seen 2 unique insiders buying, and 1 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Iridium Communications Inc. (NASDAQ:IRDM). These stocks are IDT Corporation (NYSE:IDT), Lumos Networks Corp (NASDAQ:LMOS), Vonage Holdings Corp. (NYSE:VG), RigNet Inc (NASDAQ:RNET), and Premiere Global Services, Inc. (NYSE:PGI). This group of stocks belong to the diversified communication services industry and their market caps match IRDM’s market cap.

With the returns demonstrated by the aforementioned studies, everyday investors must always keep an eye on hedge fund and insider trading sentiment, and Iridium Communications Inc. (NASDAQ:IRDM) is an important part of this process.

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