Is Vedanta Ltd (ADR) (VEDL) Going to Burn These Hedge Funds?

As aggregate interest increased, specific money managers were leading the bulls’ herd. Jeff Lignelli’s Incline Global Management initiated a $1.9 million position during the quarter. The other funds with new positions in the stock are Renaissance Technologies, David Costen Haley’s HBK Investments, and John Overdeck and David Siegel’s Two Sigma Advisors.

Let’s check out hedge fund activity in other stocks similar to Vedanta Ltd (ADR) (NYSE:VEDL). These stocks are Erie Indemnity Company (NASDAQ:ERIE), Sociedad Quimica y Minera de Chile (ADR) (NYSE:SQM), Bemis Company, Inc. (NYSE:BMS), and Donaldson Company, Inc. (NYSE:DCI). This group of stocks’ market valuations is closest to Vedanta Ltd (ADR) (NYSE:VDEL)’s market valuation.

As you can see, these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $105 million. That figure was $10 million in Vedanta Ltd (ADR) (NYSE:VDEL)’s case. Bemis Company, Inc. (NYSE:BMS) is the most popular stock in this table. On the other hand, Sociedad Quimica y Minera de Chile (ADR) (NYSE:SQM) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks, Vedanta Ltd (ADR) (NYSE:VEDL) is even less popular than Sociedad Quimica y Minera de Chile (ADR) (NYSE:SQM). Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, 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, they may not be very familiar with the bullish thesis. In either case, more research is warranted.