Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Is Mechel OAO (ADR) (MTL) A Good Stock To Buy?

It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 5.2% over the 12-month period ending October 30th, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored S&P 500 stocks by the hedge funds monitored by Insider Monkey (as of September 2014) generated a return of 9.5% over the same time span, with 63% of these stocks outperforming the benchmark. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Mechel OAO (ADR) (NYSE:MTL).

Jeroen van den Broek/

Jeroen van den Broek/

Mechel OAO (ADR) (NYSE:MTL) investors should pay attention to an increase in hedge fund interest recently. Mechel was in 6 hedge funds’ portfolio at the end of the third quarter of 2015. There were 5 hedge funds in our database with Mechel OAO (ADR) (NYSE:MTL) holdings at the end of the previous quarter. At the end of this article, we will also compare Mechel OAO to other stocks including Primero Mining Corp (NYSE:PPP), Modine Manufacturing Co. (NYSE:MOD), and Credit Suisse AG- VelocityShares Daily Inverse VIX Short Term Etn (NASDAQ:XIV) to get a better sense of its popularity.

Follow Mechel O A O (NYSE:MTL)
Trade (NYSE:MTL) Now!

What does the smart money think about Mechel OAO (ADR) (NYSE:MTL)?

Heading into Q4, a total of 6 of the hedge funds tracked by Insider Monkey were bullish in this stock, an increase of 20% from the previous quarter. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were boosting their holdings significantly.

Of the funds tracked by Insider Monkey, Israel Englander’s Millennium Management had the number one position in Mechel OAO (ADR) (NYSE:MTL), worth close to $0.2 million, accounting for less than 0.1%% of its total 13F portfolio. This was a brand new position by the way. Coming in second is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which held a $0.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining peers with similar optimism contain quant hedge funds Renaissance Technologies, Ken Griffin’s Citadel Investment Group and  D E Shaw.

Let’s also review hedge fund activity in other stocks similar to Mechel OAO (ADR) (NYSE:MTL). These stocks are Primero Mining Corp (NYSE:PPP), Modine Manufacturing Co. (NYSE:MOD), Credit Suisse AG- VelocityShares Daily Inverse VIX Short Term Etn (NASDAQ:XIV), and Karyopharm Therapeutics Inc (NASDAQ:KPTI). This group of stocks’ market caps are closest to Mechel OAO (ADR) (NYSE:MTL)’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PPP 9 12316 -2
MOD 14 39950 1
XIV 11 25345 6
KPTI 11 65394 1

As you can see these stocks had an average of 11.25 hedge funds with bullish positions and the average amount invested in these stocks was $36 million (vs. less than $1 million invested in MTL). Modine Manufacturing Co. (NYSE:MOD) is the most popular stock in this table. On the other hand Primero Mining Corp (NYSE:PPP) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Mechel OAO (ADR) (NYSE:MTL) is even less popular than Primero Mining Corp (NYSE:PPP). Considering that hedge funds aren’t fond of this stock, 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, it is also possible that they may not be very familiar with the bullish thesis. In either case more research is warranted.”

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.