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Is Sterlite Industries India Limited (ADR) (SLT) Going to Burn These Hedge Funds?

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Sterlite Industries India Limited (ADR) (NYSE:SLT) was in 8 hedge funds’ portfolio at the end of the fourth quarter of 2012. SLT shareholders have witnessed a decrease in hedge fund interest recently. There were 8 hedge funds in our database with SLT holdings at the end of the previous quarter.

Sterlite Industries India Limited (ADR) (NYSE:SLT)According to most investors, hedge funds are assumed to be underperforming, outdated investment tools of yesteryear. While there are over 8000 funds with their doors open at the moment, we hone in on the upper echelon of this group, about 450 funds. It is estimated that this group oversees the majority of the smart money’s total asset base, and by watching their top equity investments, we have uncovered a few investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy outpaced 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 (see the details here).

Equally as important, optimistic insider trading activity is a second way to parse down the stock market universe. Obviously, there are a variety of stimuli for an insider to sell shares of his or her company, but only one, very simple reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the valuable potential of this strategy if you understand what to do (learn more here).

Keeping this in mind, it’s important to take a look at the key action encompassing Sterlite Industries India Limited (ADR) (NYSE:SLT).

What does the smart money think about Sterlite Industries India Limited (ADR) (NYSE:SLT)?

At year’s end, a total of 8 of the hedge funds we track were long in this stock, a change of 0% from the third quarter. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their stakes substantially.

Of the funds we track, Renaissance Technologies, managed by Jim Simons, holds the biggest position in Sterlite Industries India Limited (ADR) (NYSE:SLT). Renaissance Technologies has a $9.2 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Citadel Investment Group, managed by Ken Griffin, which held a $1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds with similar optimism include John Overdeck and David Siegel’s Two Sigma Advisors, David Costen Haley’s HBK Investments and Thomas Bailard’s Bailard Inc.

Since Sterlite Industries India Limited (ADR) (NYSE:SLT) has experienced bearish sentiment from the aggregate hedge fund industry, we can see that there exists a select few money managers that decided to sell off their entire stakes in Q4. It’s worth mentioning that Mark McGoldrick and Jason Maynard’s Mouth Kellett Capital Management said goodbye to the largest stake of the 450+ funds we track, totaling about $9.4 million in stock. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

How have insiders been trading Sterlite Industries India Limited (ADR) (NYSE:SLT)?

Insider trading activity, especially when it’s bullish, is best served when the primary stock in question has seen transactions within the past half-year. Over the last six-month time period, Sterlite Industries India Limited (ADR) (NYSE:SLT) has seen zero unique insiders purchasing, 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 Sterlite Industries India Limited (ADR) (NYSE:SLT). These stocks are Lihua International Inc (NASDAQ:LIWA), Augusta Resource Corp. (USA) (NYSEAMEX:AZC), Southern Copper Corp (NYSE:SCCO), , and Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX). All of these stocks are in the copper industry and their market caps match SLT’s market cap.

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