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Hedge Funds Are Buying Selective Insurance Group (SIGI): Argo Group International Holdings, Ltd. (AGII), Tower Group International Ltd (TWGP)

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Selective Insurance Group (NASDAQ:SIGI) has seen an increase in support from the world’s most elite money managers lately.

Selective Insurance Group (NASDAQ:SIGI)To most market participants, hedge funds are seen as underperforming, old financial vehicles of yesteryear. While there are more than 8000 funds with their doors open at the moment, we hone in on the moguls of this club, around 450 funds. It is widely believed that this group has its hands on the majority of the hedge fund industry’s total asset base, and by watching their best picks, we have revealed a few investment strategies that have historically outstripped the broader indices. 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 began to sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 24 percentage points in 7 months (explore the details and some picks here).

Equally as important, positive insider trading sentiment is another way to break down the financial markets. Obviously, there are plenty of stimuli for an executive to get rid of shares of his or her company, but only one, very clear reason why they would initiate a purchase. Many academic studies have demonstrated the valuable potential of this strategy if investors understand where to look (learn more here).

With all of this in mind, let’s take a glance at the recent action surrounding Selective Insurance Group (NASDAQ:SIGI).

How are hedge funds trading Selective Insurance Group (NASDAQ:SIGI)?

In preparation for this year, a total of 5 of the hedge funds we track held long positions in this stock, a change of 25% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes significantly.

Of the funds we track, Ric Dillon’s Diamond Hill Capital had the most valuable position in Selective Insurance Group (NASDAQ:SIGI), worth close to $19 million, comprising 0.2% of its total 13F portfolio. Sitting at the No. 2 spot is Ken Griffin of Citadel Investment Group, with a $0.5 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other hedge funds that are bullish include Israel Englander’s Millennium Management, Mike Vranos’s Ellington and Cliff Asness’s AQR Capital Management.

As one would reasonably expect, specific money managers have been driving this bullishness. AQR Capital Management, managed by Cliff Asness, created the biggest position in Selective Insurance Group (NASDAQ:SIGI). AQR Capital Management had 0.3 million invested in the company at the end of the quarter.

What do corporate executives and insiders think about Selective Insurance Group (NASDAQ:SIGI)?

Insider purchases made by high-level executives is most useful when the company we’re looking at has seen transactions within the past 180 days. Over the last half-year time frame, Selective Insurance Group (NASDAQ:SIGI) has seen zero unique insiders purchasing, and 4 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Selective Insurance Group (NASDAQ:SIGI). These stocks are Argo Group International Holdings, Ltd. (NASDAQ:AGII), Tower Group International Ltd (NASDAQ:TWGP), Hilltop Holdings Inc. (NYSE:HTH), RLI Corp. (NYSE:RLI), and Montpelier Re Holdings Ltd. (NYSE:MRH). This group of stocks belong to the property & casualty insurance industry and their market caps are similar to SIGI’s market cap.

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