Posco (NYSE:PKX) shot up over 9% at the time of writing, and the reason might surprise you. The steelmaker is looking at some great potential going forward, and its battery material business is also expecting some growth. Investors are increasingly betting on Posco’s odds to lead a comeback.
Depending on who you talk to about the economy over the last two years, we’ve either had a recession or are still looking to fall into one. For those who think we’re in one right now, they’re looking to Posco to indicate we’re coming out of it thanks to rising demand for steel. This makes sense; in a recession, steel demand falls off. So too does the demand for many other commodities like copper. That’s why, after all, they call it Dr. Copper; it’s an indicator of overall economic health.
However, don’t make the mistake of thinking that Posco is a rising tide-lifts-all-boats situation. It’s been preparing for just such a comeback for some time now. Posco has routinely made advances to improve its situation since its inception in the late 1960s, powered by government funding since the post-Korean War era. A ZMK Capital report suggests that the current CEO is particularly inclined to advance Posco forward. Given its focus on battery technologies, like a lithium arm, that may particularly pay off in Posco’s favor.
Hedge funds, though, are not quite so convinced, as they reduced their holdings in Posco by 18.100 shares in the last quarter, the second quarter in a row they’ve pulled back. As a result, hedge fund sentiment is currently on the low side of neutral.