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Hedge Funds Are Crazy About POSCO (ADR) (PKX): Companhia Siderurgica Nacional (ADR) (SID), Gerdau SA (ADR) (GGB)

Is POSCO (ADR) (NYSE:PKX) the right pick for your portfolio? Hedge funds are in a bullish mood. The number of long hedge fund positions rose by 4 lately.

POSCO (ADR) (NYSE:PKX)To the average investor, there are a multitude of methods shareholders can use to track the equity markets. A duo of the best are hedge fund and insider trading activity. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the top hedge fund managers can outpace the market by a significant amount (see just how much).

Equally as beneficial, positive insider trading sentiment is a second way to break down the marketplace. There are a variety of incentives for an insider to get rid of shares of his or her company, but only one, very obvious reason why they would buy. Plenty of empirical studies have demonstrated the impressive potential of this strategy if “monkeys” know where to look (learn more here).

With all of this in mind, it’s important to take a peek at the recent action surrounding POSCO (ADR) (NYSE:PKX).

What have hedge funds been doing with POSCO (ADR) (NYSE:PKX)?

In preparation for this year, a total of 11 of the hedge funds we track were long in this stock, a change of 57% from one quarter earlier. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were upping their stakes significantly.

When looking at the hedgies we track, Martin Whitman’s Third Avenue Management had the largest position in POSCO (ADR) (NYSE:PKX), worth close to $236 million, accounting for 5.1% of its total 13F portfolio. The second largest stake is held by Renaissance Technologies, managed by Jim Simons, which held a $18 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other hedgies that are bullish include Ken Griffin’s Citadel Investment Group, D. E. Shaw’s D E Shaw and Jane Mendillo’s Harvard Management Co.

As aggregate interest increased, specific money managers have been driving this bullishness. Renaissance Technologies, managed by Jim Simons, initiated the biggest position in POSCO (ADR) (NYSE:PKX). Renaissance Technologies had 18 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also made a $2 million investment in the stock during the quarter. The other funds with new positions in the stock are Israel Englander’s Millennium Management, Sander Gerber’s Hudson Bay Capital Management, and Steven Cohen’s SAC Capital Advisors.

What do corporate executives and insiders think about POSCO (ADR) (NYSE:PKX)?

Bullish insider trading is at its handiest when the company in question has seen transactions within the past 180 days. Over the last half-year time frame, POSCO (ADR) (NYSE:PKX) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to POSCO (ADR) (NYSE:PKX). These stocks are Companhia Siderurgica Nacional (ADR) (NYSE:SID), Gerdau SA (ADR) (NYSE:GGB), Nucor Corporation (NYSE:NUE), ArcelorMittal (ADR) (NYSE:MT), and Tenaris S.A. (ADR) (NYSE:TS). This group of stocks are in the steel & iron industry and their market caps are closest to PKX’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Companhia Siderurgica Nacional (ADR) (NYSE:SID) 11 0 0
Gerdau SA (ADR) (NYSE:GGB) 12 0 0
Nucor Corporation (NYSE:NUE) 21 0 1
ArcelorMittal (ADR) (NYSE:MT) 7 0 0
Tenaris S.A. (ADR) (NYSE:TS) 6 0 0

With the returns demonstrated by the aforementioned research, retail investors should always pay attention to hedge fund and insider trading sentiment, and POSCO (ADR) (NYSE:PKX) is no exception.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.

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