POSCO (ADR) (PKX): Are Hedge Funds Right About This Stock?

As aggregate interest increased, some big names were breaking ground themselves. Fairfax Financial Holdings, managed by Prem Watsa, established the largest position in POSCO (ADR) (NYSE:PKX). Fairfax Financial Holdings had $6.7 million invested in the company at the end of the quarter. Francis Chou’s Chou Associates Management also made a $0.7 million investment in the stock during the quarter. The other funds with new positions in the stock are D. E. Shaw’s D E Shaw, Charles Clough’s Clough Capital Partners, and Mike Vranos’s Ellington.

Let’s now take a look at hedge fund activity in other stocks similar to POSCO (ADR) (NYSE:PKX). We will take a look at Discovery Communications Inc. (NASDAQ:DISCA), Markel Corporation (NYSE:MKL), Citrix Systems, Inc. (NASDAQ:CTXS), and Realty Income Corp (NYSE:O). All of these stocks’ market caps match PKX’s market cap.

As you can see these stocks had an average of 24.75 hedge funds with bullish positions and the average amount invested in these stocks was $686 million. That figure was $106 million in PKX’s case. Citrix Systems, Inc. (NASDAQ:CTXS) is the most popular stock in this table. On the other hand Realty Income Corp (NYSE:O) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks POSCO (ADR) (NYSE:PKX) is even less popular than O. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.