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Axis Capital Holdings Limited (NYSE:AXS): Insiders Are Dumping, Should You?

Is Axis Capital Holdings Limited (NYSE:AXS) a safe stock to buy now? Hedge funds are getting less optimistic. The number of long hedge fund positions dropped by 3 recently.

If you’d ask most market participants, hedge funds are assumed to be unimportant, outdated financial vehicles of years past. While there are more than 8000 funds with their doors open at the moment, we at Insider Monkey choose to focus on the bigwigs of this group, close to 450 funds. It is widely believed that this group controls the lion’s share of all hedge funds’ total asset base, and by tracking their top stock picks, we have brought to light a number of investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 25 percentage points in 6.5 month (explore the details and some picks here).

Just as important, optimistic insider trading sentiment is another way to break down the marketplace. As the old adage goes: there are plenty of reasons for an executive to sell shares of his or her company, but just one, very clear reason why they would buy. Several academic studies have demonstrated the useful potential of this strategy if investors know where to look (learn more here).

Consequently, we’re going to take a gander at the latest action regarding Axis Capital Holdings Limited (NYSE:AXS).

How have hedgies been trading Axis Capital Holdings Limited (NYSE:AXS)?

At year’s end, a total of 19 of the hedge funds we track were long in this stock, a change of -14% from the third quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their stakes substantially.

When looking at the hedgies we track, Richard S. Pzena’s Pzena Investment Management had the largest position in Axis Capital Holdings Limited (NYSE:AXS), worth close to $194 million, accounting for 1.6% of its total 13F portfolio. The second largest stake is held by Seminole Capital (Investment Mgmt), managed by Michael Messner, which held a $26 million position; the fund has 1.5% of its 13F portfolio invested in the stock. Some other hedge funds that are bullish include Ken Gray and Steve Walsh’s Bryn Mawr Capital, Steven Cohen’s SAC Capital Advisors and Brian Ashford-Russell and Tim Woolley’s Polar Capital.

Since Axis Capital Holdings Limited (NYSE:AXS) has witnessed a declination in interest from hedge fund managers, it’s easy to see that there exists a select few hedgies that elected to cut their full holdings at the end of the year. At the top of the heap, Bain Capital’s Brookside Capital sold off the biggest investment of all the hedgies we key on, valued at close to $32 million in stock.. Cliff Asness’s fund, AQR Capital Management, also said goodbye to its stock, about $25 million worth. These moves are important to note, as total hedge fund interest was cut by 3 funds at the end of the year.

How are insiders trading Axis Capital Holdings Limited (NYSE:AXS)?

Bullish insider trading is most useful when the company in focus has seen transactions within the past six months. Over the last half-year time period, Axis Capital Holdings Limited (NYSE:AXS) has experienced zero unique insiders buying, and 4 insider sales (see the details of insider trades here).

With the results exhibited by the aforementioned time-tested strategies, retail investors must always keep an eye on hedge fund and insider trading activity, and Axis Capital Holdings Limited (NYSE:AXS) applies perfectly to this mantra.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.

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