Should You Buy FairPoint Communications Inc (FRP)?

The government requires hedge funds and wealthy investors with over a certain portfolio size to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings discloses the funds’ positions on September 30. We at Insider Monkey have made an extensive database of more than 700 of those elite funds and prominent investors’ filings. In this article, we analyze how these elite funds and prominent investors traded FairPoint Communications Inc (NASDAQ:FRP) based on those filings.

Is FairPoint Communications Inc (NASDAQ:FRP) the right pick for your portfolio? The best stock pickers are turning bullish. The number of long hedge fund bets increased by 3 recently. FRP was in 21 hedge funds’ portfolios at the end of September. There were 18 hedge funds in our database with FRP holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Koppers Holdings Inc. (NYSE:KOP), El Pollo LoCo Holdings Inc (NASDAQ:LOCO), and Metro Bancorp Inc (NASDAQ:METR) to gather more data points.

To most traders, hedge funds are seen as slow, old investment tools of years past. While there are greater than 8000 funds trading at the moment, Our researchers choose to focus on the aristocrats of this group, about 700 funds. These hedge fund managers administer the majority of the hedge fund industry’s total capital, and by tracking their finest investments, Insider Monkey has revealed various investment strategies that have historically beaten the broader indices. Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 12 percentage points annually for a decade in their back tests.

Now, let’s review the key action regarding FairPoint Communications Inc (NASDAQ:FRP).

How have hedgies been trading FairPoint Communications Inc (NASDAQ:FRP)?

According to Insider Monkey’s hedge fund database, John M. Angelo and Michael L. Gordon’s Angelo Gordon & Co has the biggest position in FairPoint Communications Inc (NASDAQ:FRP), worth close to $79 million, comprising 5.8% of its total 13F portfolio. The second largest stake is held by Steven Tananbaum of GoldenTree Asset Management, with a $38.4 million position; the fund has 6.3% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism contain Eric Edidin and Josh Lobel’s Archer Capital Management, Jim Simons’ Renaissance Technologies and Bernard Horn’s Polaris Capital Management.

Consequently, key hedge funds were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, initiated the biggest position in FairPoint Communications Inc (NASDAQ:FRP). Citadel Investment Group had $1.1 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $0.9 million investment in the stock during the quarter. The following funds were also among the new FRP investors: Chao Ku’s Nine Chapters Capital Management, Glenn Russell Dubin’s Highbridge Capital Management, and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s go over hedge fund activity in other stocks similar to FairPoint Communications Inc (NASDAQ:FRP). These stocks are Koppers Holdings Inc. (NYSE:KOP), El Pollo LoCo Holdings Inc (NASDAQ:LOCO), Metro Bancorp Inc (NASDAQ:METR), and Concert Pharmaceuticals Inc (NASDAQ:CNCE). This group of stocks’ market values are similar to FRP’s market value.

As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $48 million. That figure was $186 million in FRP’s case. Koppers Holdings Inc. (NYSE:KOP) is the most popular stock in this table. On the other hand El Pollo LoCo Holdings Inc (NASDAQ:LOCO) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks FairPoint Communications Inc (NASDAQ:FRP) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.