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Hedge Funds Are Buying Meadowbrook Insurance Group, Inc. (MIG)

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Meadowbrook Insurance Group, Inc. (NYSE:MIG) shareholders have witnessed an increase in hedge fund sentiment recently.

To most traders, hedge funds are viewed as slow, outdated investment tools of the past. While there are more than 8000 funds with their doors open at present, we at Insider Monkey choose to focus on the bigwigs of this group, around 450 funds. It is widely believed that this group has its hands on most of the hedge fund industry’s total capital, and by keeping an eye on their highest performing equity investments, we have formulated a few investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum 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 trumped the S&P 500 index by 24 percentage points in 7 months (explore the details and some picks here).

Equally as key, bullish insider trading sentiment is another way to parse down the investments you’re interested in. Just as you’d expect, there are lots of incentives for an upper level exec to sell shares of his or her company, but only one, very simple reason why they would behave bullishly. Many empirical studies have demonstrated the useful potential of this method if you know what to do (learn more here).

With these “truths” under our belt, it’s important to take a glance at the latest action encompassing Meadowbrook Insurance Group, Inc. (NYSE:MIG).

What have hedge funds been doing with Meadowbrook Insurance Group, Inc. (NYSE:MIG)?

In preparation for this year, a total of 10 of the hedge funds we track were bullish in this stock, a change of 11% from one quarter earlier. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their holdings meaningfully.

Chuck Royce’s Small-Cap Picks, Economists' "Inside Job", Cohen Joins Museum BoardWhen looking at the hedgies we track, Royce & Associates, managed by Chuck Royce, holds the largest position in Meadowbrook Insurance Group, Inc. (NYSE:MIG). Royce & Associates has a $1.3 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is AQR Capital Management, managed by Cliff Asness, which held a $1.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other peers that hold long positions include Paul Tudor Jones’s Tudor Investment Corp, Jim Simons’s Renaissance Technologies and John Overdeck and David Siegel’s Two Sigma Advisors.

Consequently, key hedge funds have been driving this bullishness. Wexford Capital, managed by Charles Davidson, initiated the most valuable position in Meadowbrook Insurance Group, Inc. (NYSE:MIG). Wexford Capital had 0.2 million invested in the company at the end of the quarter. Jacob Gottlieb’s Visium Asset Management also made a $0.2 million investment in the stock during the quarter.

What do corporate executives and insiders think about Meadowbrook Insurance Group, Inc. (NYSE:MIG)?

Insider purchases made by high-level executives is particularly usable when the primary stock in question has seen transactions within the past half-year. Over the latest 180-day time frame, Meadowbrook Insurance Group, Inc. (NYSE:MIG) has seen 7 unique insiders purchasing, and zero 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 Meadowbrook Insurance Group, Inc. (NYSE:MIG). These stocks are Stewart Information Services Corp (NYSE:STC), American Safety Insurance Holdings, Ltd. (NYSE:ASI), Homeowners Choice Inc (NYSE:HCI), EMC Insurance Group Inc. (NASDAQ:EMCI), and Baldwin & Lyons Inc (NASDAQ:BWINB). This group of stocks are in the property & casualty insurance industry and their market caps resemble MIG’s market cap.

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