Should You Avoid Lumos Networks Corp (LMOS)?

Lumos Networks Corp (NASDAQ:LMOS) was in 4 hedge funds’ portfolio at the end of March. LMOS has experienced a decrease in hedge fund sentiment in recent months. There were 8 hedge funds in our database with LMOS positions at the end of the previous quarter.

According to most market participants, hedge funds are seen as slow, old investment vehicles of yesteryear. While there are greater than 8000 funds trading at present, we hone in on the upper echelon of this group, around 450 funds. It is widely believed that this group oversees most of the smart money’s total capital, and by watching their best stock picks, we have revealed a number of investment strategies that have historically outpaced the S&P 500 index. 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 began to sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Equally as beneficial, bullish insider trading activity is a second way to break down the financial markets. As the old adage goes: there are a variety of stimuli for an upper level exec to downsize shares of his or her company, but just one, very clear reason why they would buy. Various empirical studies have demonstrated the impressive potential of this method if piggybackers understand where to look (learn more here).

Now, let’s take a peek at the recent action encompassing Lumos Networks Corp (NASDAQ:LMOS).

What does the smart money think about Lumos Networks Corp (NASDAQ:LMOS)?

In preparation for this quarter, a total of 4 of the hedge funds we track held long positions in this stock, a change of -50% from one quarter earlier.

Seeing as Lumos Networks Corp (NASDAQ:LMOS) has witnessed declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there exists a select few hedge funds that slashed their positions entirely at the end of the first quarter. At the top of the heap, Clint Carlson’s Carlson Capital cut the largest investment of all the hedgies we monitor, comprising an estimated $3.9 million in stock.. Jacob Gottlieb’s fund, Visium Asset Management, also dumped its stock, about $2 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 4 funds at the end of the first quarter.

How have insiders been trading Lumos Networks Corp (NASDAQ:LMOS)?

Insider purchases made by high-level executives is most useful when the company we’re looking at has seen transactions within the past 180 days. Over the latest six-month time frame, Lumos Networks Corp (NASDAQ:LMOS) 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 Lumos Networks Corp (NASDAQ:LMOS). These stocks are Cbeyond, Inc. (NASDAQ:CBEY), RigNet Inc (NASDAQ:RNET), Hawaiian Telcom HoldCo Inc (NASDAQ:HCOM), ORBCOMM Inc (NASDAQ:ORBC), and IDT Corporation (NYSE:IDT). This group of stocks are the members of the diversified communication services industry and their market caps are closest to LMOS’s market cap.

With the returns exhibited by the aforementioned studies, everyday investors must always watch hedge fund and insider trading sentiment, and Lumos Networks Corp (NASDAQ:LMOS) is no exception.

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