Should You Buy Charter Communications, Inc. (CHTR)?

Charter Communications, Inc. (NASDAQ:CHTR) investors should be aware of an increase in support from the world’s most elite money managers lately.

According to most stock holders, hedge funds are assumed to be unimportant, old investment vehicles of the past. While there are more than 8000 funds with their doors open today, we choose to focus on the top tier of this group, about 450 funds. Most estimates calculate that this group oversees the lion’s share of the smart money’s total asset base, and by monitoring their best equity investments, we have brought to light a number of investment strategies that have historically beaten the S&P 500 index. Our small-cap hedge fund strategy beat 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 outperformed the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Equally as important, positive insider trading activity is a second way to parse down the stock market universe. As the old adage goes: there are many incentives for an insider to drop shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Various empirical studies have demonstrated the valuable potential of this tactic if piggybackers understand what to do (learn more here).

With all of this in mind, we’re going to take a gander at the key action encompassing Charter Communications, Inc. (NASDAQ:CHTR).

How have hedgies been trading Charter Communications, Inc. (NASDAQ:CHTR)?

In preparation for this quarter, a total of 54 of the hedge funds we track were bullish in this stock, a change of 29% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their holdings meaningfully.

According to our comprehensive database, Michael Novogratz’s Fortress Investment Group had the most valuable position in Charter Communications, Inc. (NASDAQ:CHTR), worth close to $520.9 million, comprising 8.9% of its total 13F portfolio. Sitting at the No. 2 spot is SPO Advisory Corp, managed by John H. Scully, which held a $511.1 million position; 6.9% of its 13F portfolio is allocated to the stock. Remaining peers that hold long positions include Stephen Mandel’s Lone Pine Capital, Robert Pitts’s Steadfast Capital Management and Philippe Laffont’s Coatue Management.

With a general bullishness amongst the heavyweights, key hedge funds have jumped into Charter Communications, Inc. (NASDAQ:CHTR) headfirst. SPO Advisory Corp, managed by John H. Scully, assembled the biggest position in Charter Communications, Inc. (NASDAQ:CHTR). SPO Advisory Corp had 511.1 million invested in the company at the end of the quarter. William B. Gray’s Orbis Investment Management also initiated a $181.8 million position during the quarter. The other funds with brand new CHTR positions are John Lykouretzos’s Hoplite Capital Management, Roberto Mignone’s Bridger Management, and Eric Mindich’s Eton Park Capital.

What have insiders been doing with Charter Communications, Inc. (NASDAQ:CHTR)?

Insider buying is at its handiest when the company in question has seen transactions within the past 180 days. Over the last half-year time frame, Charter Communications, Inc. (NASDAQ:CHTR) has experienced 1 unique insiders purchasing, and 11 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Charter Communications, Inc. (NASDAQ:CHTR). These stocks are Discovery Communications Inc. (NASDAQ:DISCA), Liberty Global Inc. (NASDAQ:LBTYA), DISH Network Corp. (NASDAQ:DISH), Virgin Media Inc. (NASDAQ:VMED), and Shaw Communications Inc (USA) (NYSE:SJR). This group of stocks are the members of the catv systems industry and their market caps resemble CHTR’s market cap.

With the returns demonstrated by our studies, retail investors must always pay attention to hedge fund and insider trading sentiment, and Charter Communications, Inc. (NASDAQ:CHTR) shareholders fit into this picture quite nicely.

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