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Do Hedge Funds and Insiders Love Alterra Capital Holdings Ltd (ALTE)?

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Alterra Capital Holdings Ltd (NASDAQ:ALTE) was in 20 hedge funds’ portfolio at the end of the first quarter of 2013. ALTE has experienced an increase in enthusiasm from smart money of late. There were 17 hedge funds in our database with ALTE positions at the end of the previous quarter.

Alterra Capital Holdings Ltd (NASDAQ:ALTE)

If you’d ask most market participants, hedge funds are viewed as underperforming, outdated financial vehicles of the past. While there are over 8000 funds trading at present, we choose to focus on the upper echelon of this club, close to 450 funds. It is widely believed that this group has its hands on the majority of all hedge funds’ total asset base, and by tracking their top equity investments, we have unearthed a number of investment strategies that have historically outstripped the S&P 500 index. 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 started sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).

Equally as important, positive insider trading activity is another way to break down the investments you’re interested in. Just as you’d expect, there are a variety of incentives for an upper level exec to get rid of shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Several academic studies have demonstrated the useful potential of this method if piggybackers know what to do (learn more here).

With these “truths” under our belt, we’re going to take a glance at the latest action encompassing Alterra Capital Holdings Ltd (NASDAQ:ALTE).

How are hedge funds trading Alterra Capital Holdings Ltd (NASDAQ:ALTE)?

Heading into Q2, a total of 20 of the hedge funds we track were long in this stock, a change of 18% from one quarter earlier. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were boosting their stakes significantly.

When looking at the hedgies we track, Alpine Associates, managed by Robert Emil Zoellner, holds the largest position in Alterra Capital Holdings Ltd (NASDAQ:ALTE). Alpine Associates has a $91.2 million position in the stock, comprising 3.5% of its 13F portfolio. Sitting at the No. 2 spot is Clint Carlson of Carlson Capital, with a $89 million position; the fund has 1.2% of its 13F portfolio invested in the stock. Remaining peers that are bullish include Cliff Asness’s AQR Capital Management, Matthew Halbower’s Pentwater Capital Management and Alec Litowitz and Ross Laser’s Magnetar Capital.

As one would reasonably expect, key money managers have been driving this bullishness. AQR Capital Management, managed by Cliff Asness, assembled the most valuable position in Alterra Capital Holdings Ltd (NASDAQ:ALTE). AQR Capital Management had 83.5 million invested in the company at the end of the quarter. Alec Litowitz and Ross Laser’s Magnetar Capital also made a $23.1 million investment in the stock during the quarter. The other funds with brand new ALTE positions are Thomas Lenox Kempner’s Davidson Kempner, Jim Simons’s Renaissance Technologies, and Mike Donatelli’s EAC Partners.

Insider trading activity in Alterra Capital Holdings Ltd (NASDAQ:ALTE)

Insider purchases made by high-level executives is best served when the company in question has experienced transactions within the past 180 days. Over the latest 180-day time frame, Alterra Capital Holdings Ltd (NASDAQ:ALTE) has experienced zero unique insiders purchasing, and 2 insider sales (see the details of insider trades here).

Let’s also take a look at hedge fund and insider activity in other stocks similar to Alterra Capital Holdings Ltd (NASDAQ:ALTE). These stocks are White Mountains Insurance Group Ltd (NYSE:WTM), Aspen Insurance Holdings Limited (NYSE:AHL), First American Financial Corp (NYSE:FAF), Allied World Assurance Co Holdings, AG. (NYSE:AWH), and ProAssurance Corporation (NYSE:PRA). This group of stocks belong to the property & casualty insurance industry and their market caps are similar to ALTE’s market cap.

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