This Metric Says You Are Smart to Sell Steel Dynamics, Inc. (STLD)

Steel Dynamics, Inc. (NASDAQ:STLD) was in 17 hedge funds’ portfolio at the end of March. STLD shareholders have witnessed a decrease in hedge fund interest lately. There were 17 hedge funds in our database with STLD positions at the end of the previous quarter.

To the average investor, there are many metrics investors can use to monitor publicly traded companies. A couple of the best are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the top investment managers can trounce their index-focused peers by a healthy amount (see just how much).

Equally as integral, positive insider trading activity is a second way to parse down the investments you’re interested in. As the old adage goes: there are plenty of reasons for a bullish insider to downsize shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the market-beating potential of this strategy if “monkeys” understand what to do (learn more here).

Now, let’s take a look at the key action regarding Steel Dynamics, Inc. (NASDAQ:STLD).

How have hedgies been trading Steel Dynamics, Inc. (NASDAQ:STLD)?

In preparation for this quarter, a total of 17 of the hedge funds we track held long positions in this stock, a change of 0% from the first quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their stakes considerably.

When looking at the hedgies we track, AQR Capital Management, managed by Cliff Asness, holds the largest position in Steel Dynamics, Inc. (NASDAQ:STLD). AQR Capital Management has a $44 million position in the stock, comprising 0.2% of its 13F portfolio. On AQR Capital Management’s heels is David Dreman of Dreman Value Management, with a $29.2 million position; the fund has 0.8% of its 13F portfolio invested in the stock. Remaining hedge funds that hold long positions include Dmitry Balyasny’s Balyasny Asset Management, Israel Englander’s Millennium Management and Larry Foley and Paul Farrell’s Bronson Point Partners.

Because Steel Dynamics, Inc. (NASDAQ:STLD) has experienced declining sentiment from the aggregate hedge fund industry, it’s safe to say that there is a sect of fund managers that decided to sell off their full holdings at the end of the first quarter. It’s worth mentioning that John Burbank’s Passport Capital cut the largest stake of the 450+ funds we key on, totaling close to $20.3 million in stock.. Jason Adler’s fund, AlphaBet Management, also dumped its stock, about $3.3 million worth. These transactions are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

How have insiders been trading Steel Dynamics, Inc. (NASDAQ:STLD)?

Bullish insider trading is particularly usable when the company in question has experienced transactions within the past half-year. Over the last six-month time period, Steel Dynamics, Inc. (NASDAQ:STLD) has seen zero unique insiders purchasing, and 1 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Steel Dynamics, Inc. (NASDAQ:STLD). These stocks are Harsco Corporation (NYSE:HSC), Grupo Simec S.A.B. de C.V. (ADR) (NYSEAMEX:SIM), Mechel OAO (ADR) (NYSE:MTL), United States Steel Corporation (NYSE:X), and Ternium S.A. (ADR) (NYSE:TX). This group of stocks are in the steel & iron industry and their market caps resemble STLD’s market cap.