Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: POSCO (ADR) (NYSE:PKX).
POSCO (ADR) (NYSE:PKX) investors should be aware of a decrease in hedge fund sentiment in recent months. 14 hedge funds that we track were long the stock on September 30. There were 15 hedge funds in our database with PKX positions 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 Noble Energy, Inc. (NYSE:NBL), Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP), and Equifax Inc. (NYSE:EFX) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
How have hedgies been trading POSCO (ADR) (NYSE:PKX)?
At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 7% dip from the second quarter of 2016, which had reached a yearly high. On the other hand, there were a total of 8 hedge funds with a bullish position in PKX at the beginning of this year. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holds the most valuable position in POSCO (ADR) (NYSE:PKX). Arrowstreet Capital has a $65.3 million position in the stock. On Arrowstreet Capital’s heels is Fairfax Financial Holdings, led by Prem Watsa, which holds a $9.8 million position. Other peers that are bullish contain David Kowitz and Sheldon Kasowitz’s Indus Capital, Simon Sadler’s Segantii Capital, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners. We should note that Indus Capital is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.