This Metric Says You Are Smart to Sell TELUS Corporation (USA) (TU)

TELUS Corporation (USA) (NYSE:TU) has experienced a decrease in hedge fund interest lately.

To most investors, hedge funds are viewed as underperforming, old financial vehicles of the past. While there are greater than 8000 funds trading at the moment, we choose to focus on the crème de la crème of this club, close to 450 funds. Most estimates calculate that this group oversees most of the smart money’s total capital, and by tracking their best equity investments, we have identified a few investment strategies that have historically outpaced Mr. Market. 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 started 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 (see all of our picks from August).

Just as important, bullish insider trading activity is another way to parse down the marketplace. There are plenty of motivations for a corporate insider to cut shares of his or her company, but only one, very simple reason why they would buy. Plenty of empirical studies have demonstrated the useful potential of this tactic if piggybackers know what to do (learn more here).

With these “truths” under our belt, we’re going to take a gander at the recent action surrounding TELUS Corporation (USA) (NYSE:TU).

How have hedgies been trading TELUS Corporation (USA) (NYSE:TU)?

At year’s end, a total of 5 of the hedge funds we track were bullish in this stock, a change of -50% from the third quarter. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their stakes significantly.

When looking at the hedgies we track, Jim Simons’s Renaissance Technologies had the largest position in TELUS Corporation (USA) (NYSE:TU), worth close to $60.5 million, comprising 0.2% of its total 13F portfolio. Coming in second is Forward Management, managed by J. Alan Reid, Jr., which held a $3.3 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Some other peers that are bullish include Neil Chriss’s Hutchin Hill Capital, Ken Griffin’s Citadel Investment Group and Steven Cohen’s SAC Capital Advisors.

Since TELUS Corporation (USA) (NYSE:TU) has experienced bearish sentiment from the smart money, it’s safe to say that there exists a select few hedge funds that decided to sell off their entire stakes last quarter. It’s worth mentioning that Robert Emil Zoellner’s Alpine Associates sold off the largest stake of the 450+ funds we monitor, worth about $120.1 million in stock.. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also sold off its stock, about $6.7 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 5 funds last quarter.

What do corporate executives and insiders think about TELUS Corporation (USA) (NYSE:TU)?

Bullish insider trading is best served when the company in focus has experienced transactions within the past six months. Over the last six-month time period, TELUS Corporation (USA) (NYSE:TU) has experienced zero unique insiders buying, 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 TELUS Corporation (USA) (NYSE:TU). These stocks are China Unicom (Hong Kong) Limited (ADR) (NYSE:CHU), Telefonica Brasil SA (ADR) (NYSE:VIV), Sprint Nextel Corporation (NYSE:S), Rogers Communications Inc. (USA) (NYSE:RCI), and Mobile TeleSystems OJSC (ADR) (NYSE:MBT). This group of stocks are in the wireless communications industry and their market caps are similar to TU’s market cap.