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Argo Group International Holdings, Ltd. (AGII): Are Hedge Funds Right To Ditch This Stock?

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Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.

Argo Group International Holdings, Ltd. (NASDAQ:AGII) has seen a decrease in hedge fund interest lately. 13 hedge funds that we track were long the stock on September 30. There were 18 hedge funds in our database with AGII holdings at the end of the June quarter. At the end of this article we will also compare AGII to other stocks including Ebix Inc (NASDAQ:EBIX), Dana Holding Corporation (NYSE:DAN), and DineEquity Inc (NYSE:DIN) to get a better sense of its popularity.

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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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What does the smart money think about Argo Group International Holdings, Ltd. (NASDAQ:AGII)?

At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a 28% fall from one quarter earlier, as hedge fund ownership continues to decline. By comparison, 18 hedge funds held shares or bullish call options in AGII heading into this year. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

HedgeFundSentimentChart

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Pzena Investment Management, led by Richard S. Pzena, holds the largest position in Argo Group International Holdings, Ltd. (NASDAQ:AGII). Pzena Investment Management has a $29.7 million position in the stock. The second most bullish fund manager is Millennium Management, founded by Israel Englander, which holds a $26.1 million position. Remaining professional money managers that are bullish encompass Cliff Asness’ AQR Capital Management, David E. Shaw’s D E Shaw, and Jim Simons’ Renaissance Technologies. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

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