This Metric Says You Are Smart to Sell Potash Corp./Saskatchewan (USA) (POT)

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Is Potash Corp./Saskatchewan (USA) (NYSE:POT) a sell?

To many investors, hedge funds are assumed to be useless, old investment tools of a forgotten age. Although there are In excess of 8,000 hedge funds with their doors open today, this site focuses on the bigwigs of this club, close to 525 funds. It is assumed that this group controls the lion’s share of the hedge fund industry’s total assets, and by paying attention to their highest quality picks, we’ve figured out a few investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually 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 trumped the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).

Just as useful, bullish insider trading activity is another way to analyze the stock market universe. Just as you’d expect, there are many stimuli for an executive to drop shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Many academic studies have demonstrated the valuable potential of this strategy if investors understand where to look (learn more here).

What’s more, it’s important to analyze the latest info for Potash Corp./Saskatchewan (USA) (NYSE:POT).

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

In preparation for the third quarter, a total of 21 of the hedge funds we track held long positions in this stock, a change of -9% from one quarter earlier. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their holdings substantially.

Potash Corp./Saskatchewan (USA) (NYSE:POT)According to our 13F database, First Eagle Investment Management, managed by Matt McLennan, holds the most valuable position in Potash Corp./Saskatchewan (USA) (NYSE:POT). First Eagle Investment Management has a $558 million position in the stock, comprising 1.7% of its 13F portfolio. The second largest stake is held by Adage Capital Management, managed by Phill Gross and Robert Atchinson, which held a $238.2 million position; 0.7% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish include Daniel Bubis’s Tetrem Capital Management, Richard Chilton’s Chilton Investment Company and D. E. Shaw’s D E Shaw.

Judging by the fact that Potash Corp./Saskatchewan (USA) (NYSE:POT) has witnessed dropping sentiment from the entirety of the hedge funds we track, logic holds that there lies a certain “tier” of hedgies who sold off their entire stakes at the end of the second quarter. It’s worth mentioning that Guru Ramakrishnan’s Meru Capital said goodbye to the largest investment of the “upper crust” of funds we key on, valued at an estimated $11.8 million in stock, and Robert Bishop of Impala Asset Management was right behind this move, as the fund dumped about $8 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds at the end of the second quarter.

What have insiders been doing with Potash Corp./Saskatchewan (USA) (NYSE:POT)?

Bullish insider trading is most useful when the company in question has experienced transactions within the past 180 days. Over the latest six-month time period, Potash Corp./Saskatchewan (USA) (NYSE:POT) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll check out the relationship between both of these indicators in other stocks similar to Potash Corp./Saskatchewan (USA) (NYSE:POT). These stocks are CF Industries Holdings, Inc. (NYSE:CF), Agrium Inc. (USA) (NYSE:AGU), Monsanto Company (NYSE:MON), Mosaic Co (NYSE:MOS), and Syngenta AG (ADR) (NYSE:SYT). This group of stocks belong to the agricultural chemicals industry and their market caps resemble POT’s market cap.

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