Harmonic Inc (HLIT): Are Hedge Funds Right About This Stock?
Is it smart to be bullish on Harmonic Inc (NASDAQ:HLIT)?
In the eyes of many of your fellow readers, hedge funds are seen as bloated, old financial vehicles of a forgotten age. Although there are over 8,000 hedge funds in operation today, Insider Monkey looks at the bigwigs of this club, close to 525 funds. It is assumed that this group controls most of the hedge fund industry's total capital, and by watching their highest quality picks, we've spotted a number of investment strategies that have historically beaten the S&P 500. Our small-cap hedge fund strategy outstripped 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 outpaced the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).
Just as key, bullish insider trading sentiment is another way to analyze the financial markets. There are lots of stimuli for an upper level exec to downsize shares of his or her company, but just one, very simple reason why they would initiate a purchase. Several empirical studies have demonstrated the useful potential of this method if investors understand what to do (learn more here).
What's more, it's important to analyze the recent info about Harmonic Inc (NASDAQ:HLIT).
How are hedge funds trading Harmonic Inc (NASDAQ:HLIT)?
At the end of the second quarter, a total of 10 of the hedge funds we track were long in this stock, a change of 11% from the first quarter. With hedge funds' sentiment swirling, there exists a few notable hedge fund managers who were upping their holdings meaningfully.
When using filings from the hedgies we track, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital had the largest position in Harmonic Inc (NASDAQ:HLIT), worth close to $6.1 million, accounting for less than 0.1%% of its total 13F portfolio. The second largest stake is held by Wilbur Ross of Invesco Private Capital (WL Ross), with a $3.3 million position; 0.3% of its 13F portfolio is allocated to the company. Remaining hedgies with similar optimism include Cliff Asness's AQR Capital Management, Jim Simons's Renaissance Technologies and Chuck Royce's Royce & Associates.
As one would understandably expect, certain money managers have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the most outsized position in Harmonic Inc (NASDAQ:HLIT). Arrowstreet Capital had 6.1 million invested in the company at the end of the quarter. Wilbur Ross's Invesco Private Capital (WL Ross) also made a $3.3 million investment in the stock during the quarter. The following funds were also among the new HLIT investors: Cliff Asness's AQR Capital Management, Jim Simons's Renaissance Technologies, and Chuck Royce's Royce & Associates.
Insider trading activity in Harmonic Inc (NASDAQ:HLIT)
Bullish insider trading is particularly usable when the company in focus has seen transactions within the past six months. Over the last 180-day time frame, Harmonic Inc (NASDAQ:HLIT) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We'll also take a look at the relationship between both of these indicators in other stocks similar to Harmonic Inc (NASDAQ:HLIT). These stocks are 8x8, Inc. (NASDAQ:EGHT), Infinera Corp. (NASDAQ:INFN), Vocera Communications Inc (NYSE:VCRA), Tellabs, Inc. (NASDAQ:TLAB), and Sonus Networks, Inc. (NASDAQ:SONS). This group of stocks are the members of the communication equipment industry and their market caps match HLIT's market cap.
# of Hedge Funds
# of Insiders Buying
# of Insiders Selling
8x8, Inc. (NASDAQ:EGHT)
Infinera Corp. (NASDAQ:INFN)
Vocera Communications Inc (NYSE:VCRA)
Tellabs, Inc. (NASDAQ:TLAB)
Sonus Networks, Inc. (NASDAQ:SONS)
Using the returns shown by Insider Monkey's research, regular investors must always pay attention to hedge fund and insider trading sentiment, and Harmonic Inc (NASDAQ:HLIT) is no exception.