Should You Buy Vedanta Ltd (ADR) (VEDL)?

Now, some big names were leading the bulls’ herd. Andy Redleaf’s Whitebox Advisors initiated the most outsized position in Vedanta Ltd (ADR) (NYSE:VEDL). Whitebox Advisors had $1.1 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $0.2 million investment in the stock during the quarter. The only other fund with a brand new VEDL position is Richard Driehaus’ Driehaus Capital.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Vedanta Ltd (ADR) (NYSE:VEDL) but similarly valued. These stocks are Dr. Reddy’s Laboratories Limited (ADR) (NYSE:RDY), iShares NASDAQ Biotechnology Index (ETF) (NASDAQ:IBB), Packaging Corp Of America (NYSE:PKG), and Torchmark Corporation (NYSE:TMK). This group of stocks’ market caps are similar to VEDL’s market cap.

As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $357 million. That figure was just $22 million in VEDL’s case. iShares NASDAQ Biotechnology Index (ETF) (NASDAQ:IBB) is the most popular stock in this table. On the other hand Dr. Reddy’s Laboratories Limited (ADR) (NYSE:RDY) is the least popular one with only nine bullish hedge fund positions. Compared to these stocks Vedanta Ltd (ADR) (NYSE:VEDL) has the same number of shares as RDY. Considering that hedge funds aren’t fond of this stock in relation to the majority of the 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.

Disclosure: none