In the eyes of most investors, hedge funds are assumed to be underperforming, old investment vehicles of yesteryear. While there are over 8000 funds trading at the moment, we hone in on the masters of this group, about 450 funds. It is estimated that this group has its hands on most of the hedge fund industry’s total asset base, and by monitoring their top investments, we have revealed 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 per 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 topped the S&P 500 index by 24 percentage points in 7 months (explore the details and some picks here).
Just as key, bullish insider trading activity is a second way to parse down the world of equities. As the old adage goes: there are many motivations for an insider to get rid of shares of his or her company, but just one, very clear reason why they would behave bullishly. Plenty of academic studies have demonstrated the valuable potential of this tactic if shareholders understand where to look (learn more here).
With all of this in mind, we’re going to take a look at the recent action encompassing Telephone & Data Systems, Inc. (NYSE:TDS).
How are hedge funds trading Telephone & Data Systems, Inc. (NYSE:TDS)?
At the end of the fourth quarter, a total of 14 of the hedge funds we track held long positions in this stock, a change of 8% from the third quarter. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their stakes considerably.
According to our comprehensive database, GAMCO Investors, managed by Mario Gabelli, holds the largest position in Telephone & Data Systems, Inc. (NYSE:TDS). GAMCO Investors has a $119 million position in the stock, comprising 0.9% of its 13F portfolio. Sitting at the No. 2 spot is Charles de Vaulx of International Value Advisers, with a $29 million position; 3.6% of its 13F portfolio is allocated to the company. Other hedgies that hold long positions include Chuck Royce’s Royce & Associates, Cliff Asness’s AQR Capital Management and Jim Simons’s Renaissance Technologies.
As one would reasonably expect, key money managers have been driving this bullishness. GoldenTree Asset Management, managed by Steven Tananbaum, established the largest position in Telephone & Data Systems, Inc. (NYSE:TDS). GoldenTree Asset Management had 6 million invested in the company at the end of the quarter. Paul Touradji’s TOURADJI CAPITAL MANAGEMENT, LP also made a $0 million investment in the stock during the quarter. The only other fund with a brand new TDS position is Israel Englander’s Millennium Management.
Insider trading activity in Telephone & Data Systems, Inc. (NYSE:TDS)
Insider purchases made by high-level executives is particularly usable when the company we’re looking at has experienced transactions within the past 180 days. Over the latest six-month time frame, Telephone & Data Systems, Inc. (NYSE:TDS) has experienced zero unique insiders purchasing, and 2 insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to Telephone & Data Systems, Inc. (NYSE:TDS). These stocks are Portugal Telecom, SGPS (ADR) (NYSE:PT), Ubiquiti Networks Inc (NASDAQ:UBNT), MetroPCS Communications Inc (NYSE:PCS), United States Cellular Corporation (NYSE:USM), and InterDigital, Inc. (NASDAQ:IDCC). This group of stocks are in the wireless communications industry and their market caps resemble TDS’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Portugal Telecom, SGPS (ADR) (NYSE:PT) | 2 | 0 | 0 |
| Ubiquiti Networks Inc (NASDAQ:UBNT) | 6 | 0 | 6 |
| MetroPCS Communications Inc (NYSE:PCS) | 43 | 0 | 7 |
| United States Cellular Corporation (NYSE:USM) | 8 | 0 | 2 |
| InterDigital, Inc. (NASDAQ:IDCC) | 16 | 0 | 5 |
With the returns demonstrated by the aforementioned strategies, retail investors must always watch hedge fund and insider trading activity, and Telephone & Data Systems, Inc. (NYSE:TDS) shareholders fit into this picture quite nicely.
