KT Corporation (ADR) (NYSE:KT): Insiders Are Dumping, Should You? – PT Telekomunikasi Indonesia (ADR) (NYSE:TLK), PT Indosat Tbk (ADR) (NYSE:IIT)

Is KT Corporation (ADR) (NYSE:KT) a first-rate investment today? The best stock pickers are in a pessimistic mood. The number of long hedge fund bets were trimmed by 1 in recent months.

In the eyes of most market participants, hedge funds are perceived as underperforming, outdated investment tools of yesteryear. While there are more than 8000 funds in operation at present, we look at the upper echelon of this club, around 450 funds. It is estimated that this group controls the majority of the smart money’s total capital, and by paying attention to their best equity investments, we have unearthed a number of investment strategies that have historically outperformed 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 beaten the S&P 500 index by 24 percentage points in 7 months (explore the details and some picks here).

Just as integral, optimistic insider trading activity is another way to parse down the marketplace. There are a variety of stimuli for an upper level exec to drop shares of his or her company, but only one, very simple reason why they would behave bullishly. Various empirical studies have demonstrated the impressive potential of this tactic if “monkeys” understand what to do (learn more here).

With all of this in mind, it’s important to take a look at the recent action regarding KT Corporation (ADR) (NYSE:KT).

What have hedge funds been doing with KT Corporation (ADR) (NYSE:KT)?

Heading into 2013, a total of 11 of the hedge funds we track were long in this stock, a change of -8% from the third quarter. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were increasing their holdings meaningfully.

Of the funds we track, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the most valuable position in KT Corporation (ADR) (NYSE:KT). Arrowstreet Capital has a $40 million position in the stock, comprising 0.2% of its 13F portfolio. On Arrowstreet Capital’s heels is Jeffrey Vinik of Vinik Asset Management, with a $30 million position; 0% of its 13F portfolio is allocated to the company. Remaining hedge funds that hold long positions include Andrew Weiss’s Weiss Asset Management, Cliff Asness’s AQR Capital Management and D. E. Shaw’s D E Shaw.

Judging by the fact that KT Corporation (ADR) (NYSE:KT) has experienced declining sentiment from the entirety of the hedge funds we track, we can see that there exists a select few hedge funds that slashed their entire stakes heading into 2013. At the top of the heap, Daniel S. Och’s OZ Management sold off the biggest investment of the “upper crust” of funds we watch, worth about $16 million in stock.. Bruce Kovner’s fund, Caxton Associates LP, also cut its stock, about $0 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 1 funds heading into 2013.

What do corporate executives and insiders think about KT Corporation (ADR) (NYSE:KT)?

Insider trading activity, especially when it’s bullish, is most useful when the company in question has seen transactions within the past half-year. Over the latest half-year time period, KT Corporation (ADR) (NYSE:KT) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to KT Corporation (ADR) (NYSE:KT). These stocks are France Telecom SA (ADR) (NYSE:FTE), PT Telekomunikasi Indonesia (ADR) (NYSE:TLK), PT Indosat Tbk (ADR) (NYSE:IIT), Philippine Long Distance Telephone (ADR) (NYSE:PHI), and Verisign, Inc. (NASDAQ:VRSN). This group of stocks are the members of the telecom services – foreign industry and their market caps are similar to KT’s market cap.