Should You Avoid POSCO (ADR) (PKX)?

POSCO (ADR) (NYSE:PKX) has seen a decrease in hedge fund sentiment in recent months.

At the moment, there are a multitude of gauges shareholders can use to monitor stocks. Some of the most useful are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the top fund managers can outpace their index-focused peers by a very impressive amount (see just how much).

Equally as important, optimistic insider trading activity is a second way to parse down the financial markets. Obviously, there are lots of reasons for a bullish insider to downsize shares of his or her company, but just one, very obvious reason why they would buy. Several empirical studies have demonstrated the valuable potential of this tactic if piggybackers understand where to look (learn more here).

Consequently, it’s important to take a peek at the latest action surrounding POSCO (ADR) (NYSE:PKX).

How have hedgies been trading POSCO (ADR) (NYSE:PKX)?

At the end of the first quarter, a total of 9 of the hedge funds we track were long in this stock, a change of -25% from the first quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their stakes significantly.

Of the funds we track, Third Avenue Management, managed by Martin Whitman, holds the most valuable position in POSCO (ADR) (NYSE:PKX). Third Avenue Management has a $203.9 million position in the stock, comprising 3.9% of its 13F portfolio. The second largest stake is held by Renaissance Technologies, managed by Jim Simons, which held a $9.5 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining peers that are bullish include Ken Griffin’s Citadel Investment Group, D. E. Shaw’s D E Shaw and Jane Mendillo’s Harvard Management Co.

Judging by the fact that POSCO (ADR) (NYSE:PKX) has witnessed bearish sentiment from hedge fund managers, we can see that there lies a certain “tier” of hedgies that slashed their entire stakes in Q1. Intriguingly, Sander Gerber’s Hudson Bay Capital Management sold off the biggest position of all the hedgies we monitor, valued at close to $0.6 million in stock.. Steven Cohen’s fund, SAC Capital Advisors, also cut its stock, about $0.5 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 3 funds in Q1.

What have insiders been doing with POSCO (ADR) (NYSE:PKX)?

Bullish insider trading is particularly usable when the company we’re looking at has seen transactions within the past 180 days. Over the latest half-year time period, POSCO (ADR) (NYSE:PKX) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to POSCO (ADR) (NYSE:PKX). These stocks are Companhia Siderurgica Nacional (ADR) (NYSE:SID), Gerdau SA (ADR) (NYSE:GGB), Nucor Corporation (NYSE:NUE), ArcelorMittal (ADR) (NYSE:MT), and Tenaris S.A. (ADR) (NYSE:TS). This group of stocks belong to the steel & iron industry and their market caps match PKX’s market cap.