Tenaris S.A. (ADR) (NYSE:TS) has experienced a decrease in hedge fund interest lately.
If you'd ask most stock holders, hedge funds are seen as worthless, old financial vehicles of years past. While there are over 8000 funds trading at the moment, we choose to focus on the bigwigs of this club, about 450 funds. Most estimates calculate that this group controls the lion's share of all hedge funds' total asset base, and by keeping an eye on their highest performing picks, we have discovered a number of investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outperformed 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 trumped the S&P 500 index by 24 percentage points in 7 months (see the details here).
Equally as beneficial, positive insider trading activity is another way to parse down the financial markets. Just as you'd expect, there are a variety of motivations 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 market-beating potential of this method if "monkeys" know what to do (learn more here).
Now, it's important to take a glance at the latest action encompassing Tenaris S.A. (ADR) (NYSE:TS).
In preparation for this year, a total of 6 of the hedge funds we track were long in this stock, a change of -14% from the third quarter. With the smart money's capital changing hands, there exists a select group of notable hedge fund managers who were increasing their holdings significantly.
According to our comprehensive database, Jim Simons's Renaissance Technologies had the largest position in Tenaris S.A. (ADR) (NYSE:TS), worth close to $25.2 million, comprising 0.1% of its total 13F portfolio. Coming in second is D E Shaw, managed by D. E. Shaw, which held a $9.4 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other hedgies that hold long positions include J. Alan Reid, Jr.'s Forward Management, Bruce Kovner's Caxton Associates LP and Cliff Asness's AQR Capital Management.
Since Tenaris S.A. (ADR) (NYSE:TS) has witnessed bearish sentiment from hedge fund managers, it's easy to see that there was a specific group of fund managers that elected to cut their entire stakes heading into 2013. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital dropped the largest position of the 450+ funds we watch, comprising an estimated $30.6 million in stock.. Israel Englander's fund, Millennium Management, also cut its stock, about $0.7 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 1 funds heading into 2013.
Insider trading activity, especially when it's bullish, is best served when the company in focus has experienced transactions within the past half-year. Over the last 180-day time period, Tenaris S.A. (ADR) (NYSE:TS) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let's also examine hedge fund and insider activity in other stocks similar to Tenaris S.A. (ADR) (NYSE:TS). These stocks are Companhia Siderurgica Nacional (ADR) (NYSE:SID), Gerdau SA (ADR) (NYSE:GGB), Nucor Corporation (NYSE:NUE), ArcelorMittal (ADR) (NYSE:MT), and POSCO (ADR) (NYSE:PKX). This group of stocks belong to the steel & iron industry and their market caps resemble TS's market cap.