Mercer International Inc. (MERC): One Can’t-Miss Metric

Mercer International Inc. (NASDAQ:MERC) was in 12 hedge funds’ portfolio at the end of the fourth quarter of 2012. MERC has seen a decrease in hedge fund sentiment recently. There were 12 hedge funds in our database with MERC positions at the end of the previous quarter; in our experience, this is a bearish indicator.

At the moment, there are many indicators market participants can use to analyze Mr. Market. Two of the most innovative are hedge fund and insider trading interest. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the best investment managers can beat the market by a healthy amount (see just how much).

Equally as key, positive insider trading sentiment is another way to parse down the marketplace. Just as you’d expect, there are a variety of stimuli for an upper level exec to downsize shares of his or her company, but only one, very simple reason why they would behave bullishly. Plenty of academic studies have demonstrated the valuable potential of this strategy if shareholders know what to do (learn more here).

Keeping this in mind, let’s take a glance at the key action regarding Mercer International Inc. (NASDAQ:MERC).

How are hedge funds trading Mercer International Inc. (NASDAQ:MERC)?

In preparation for this year, a total of 12 of the hedge funds we track held long positions in this stock, a change of 0% from the third quarter. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their holdings meaningfully.

According to our comprehensive database, Kerr Neilson’s Platinum Asset Management had the most valuable position in Mercer International Inc. (NASDAQ:MERC), worth close to $54.9 million, comprising 1.2% of its total 13F portfolio. The second largest stake is held by Jeffrey Gates of Gates Capital Management, with a $31.6 million position; 2% of its 13F portfolio is allocated to the company. Remaining peers that hold long positions include Jonathan Kolatch’s Redwood Capital Management, Michael Johnston’s Steelhead Partners and John Fichthorn’s Dialectic Capital Management.

Insider trading activity in Mercer International Inc. (NASDAQ:MERC)

Bullish insider trading is particularly usable when the company we’re looking at has experienced transactions within the past half-year. Over the last half-year time frame, Mercer International Inc. (NASDAQ:MERC) has experienced 2 unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Mercer International Inc. (NASDAQ:MERC). These stocks are P.H. Glatfelter Company (NYSE:GLT), Boise Inc. (NYSE:BZ), Orchids Paper Products Company (NYSEAMEX:TIS), Wausau Paper Corp. (NYSE:WPP), and Neenah Paper, Inc. (NYSE:NP). This group of stocks are the members of the paper & paper products industry and their market caps resemble MERC’s market cap.