After several tireless days we have finished crunching the numbers from the more than 700 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards POSCO (ADR) (NYSE:PKX).
Is POSCO (ADR) (NYSE:PKX) a marvelous investment today? The best stock pickers are taking a bullish view. The number of long hedge fund positions rose by 1 recently. PKX was in 12 hedge funds’ portfolios at the end of September. There were 11 hedge funds in our database with PKX holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Discovery Communications Inc. (NASDAQ:DISCA), Markel Corporation (NYSE:MKL), and Citrix Systems, Inc. (NASDAQ:CTXS) to gather more data points.
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In the financial world there are a lot of indicators market participants put to use to analyze publicly traded companies. A couple of the less utilized indicators are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the best investment managers can beat their index-focused peers by a significant amount (see the details here).
Now, we’re going to take a peek at the new action regarding POSCO (ADR) (NYSE:PKX).
How have hedgies been trading POSCO (ADR) (NYSE:PKX)?
At Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from the second quarter. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Martin Whitman’s Third Avenue Management has the biggest position in POSCO (ADR) (NYSE:PKX), worth close to $53 million, accounting for 1.4% of its total 13F portfolio. Sitting at the No. 2 spot is Mohnish Pabrai, managed by Mohnish Pabrai, which holds a $34.4 million position; 9.1% of its 13F portfolio is allocated to the company. Other peers that are bullish encompass Prem Watsa’s Fairfax Financial Holdings, Matthew Hulsizer’s PEAK6 Capital Management and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
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.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DISCA | 23 | 429369 | 1 |
| MKL | 25 | 783140 | 9 |
| CTXS | 38 | 1436235 | -1 |
| O | 13 | 93579 | 1 |
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.
