Potash Corp./Saskatchewan (USA) (NYSE:POT): Are Hedge Funds Right About This Stock?

Is Potash Corp./Saskatchewan (USA) (NYSE:POT) an exceptional stock to buy now? The smart money is getting more bullish. The number of long hedge fund positions inched up by 2 lately.

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In the eyes of most investors, hedge funds are perceived as underperforming, outdated investment tools of yesteryear. While there are over 8000 funds with their doors open at the moment, we at Insider Monkey choose to focus on the top tier of this club, close to 450 funds. It is estimated that this group controls the lion’s share of the hedge fund industry’s total asset base, and by paying attention to their highest performing stock picks, we have brought to light a few investment strategies that have historically beaten the S&P 500 index. 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 started sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 25 percentage points in 6.5 month (check out a sample of our picks).

Just as beneficial, optimistic insider trading activity is another way to break down the stock market universe. Obviously, there are a number of incentives for a corporate insider to downsize 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 what to do (learn more here).

With all of this in mind, it’s important to take a glance at the latest action regarding Potash Corp./Saskatchewan (USA) (NYSE:POT).

How are hedge funds trading Potash Corp./Saskatchewan (USA) (NYSE:POT)?

Heading into 2013, a total of 25 of the hedge funds we track held long positions in this stock, a change of 9% from the third quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their stakes considerably.

When looking at the hedgies we track, Jean-Marie Eveillard’s First Eagle Investment Management had the most valuable position in Potash Corp./Saskatchewan (USA) (NYSE:POT), worth close to $393 million, comprising 1.4% of its total 13F portfolio. On First Eagle Investment Management’s heels is Adage Capital Management, managed by Phill Gross and Robert Atchinson, which held a $355 million position; 1.4% of its 13F portfolio is allocated to the company. Remaining hedge funds that hold long positions include Daniel Bubis’s Tetrem Capital Management, and Jim Simons’s Renaissance Technologies.

As aggregate interest increased, some big names have been driving this bullishness. First Eagle Investment Management, managed by Jean-Marie Eveillard, established the most valuable position in Potash Corp./Saskatchewan (USA) (NYSE:POT). First Eagle Investment Management had 393 million invested in the company at the end of the quarter. Philippe Jabre’s Jabre Capital Partners also made a $73 million investment in the stock during the quarter. The other funds with brand new POT positions are Jim Simons’s Renaissance Technologies, Robert Bishop’s Impala Asset Management, and Anthony Giammalva’s Sound Energy Partners.

How have insiders been trading Potash Corp./Saskatchewan (USA) (NYSE:POT)?

Insider purchases made by high-level executives is best served when the company we’re looking at has experienced transactions within the past half-year. Over the latest six-month time frame, Potash Corp./Saskatchewan (USA) (NYSE:POT) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).

With the returns shown by the aforementioned studies, retail investors should always watch hedge fund and insider trading sentiment, and Potash Corp./Saskatchewan (USA) (NYSE:POT) is an important part of this process.

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

Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.

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