Montpelier Re Holdings Ltd. (NYSE:MRH) shareholders have witnessed a decrease in hedge fund sentiment lately.
According to most investors, hedge funds are seen as unimportant, outdated financial tools of yesteryear. While there are over 8000 funds trading today, we choose to focus on the moguls of this club, around 450 funds. It is estimated that this group controls most of all hedge funds’ total capital, and by tracking their highest performing picks, we have uncovered a number of investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per 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 beaten the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).
Equally as beneficial, positive insider trading activity is another way to parse down the financial markets. As the old adage goes: there are a variety 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. Various empirical studies have demonstrated the valuable potential of this method if you understand what to do (learn more here).
With all of this in mind, it’s important to take a look at the recent action encompassing Montpelier Re Holdings Ltd. (NYSE:MRH).
What does the smart money think about Montpelier Re Holdings Ltd. (NYSE:MRH)?
At year’s end, a total of 9 of the hedge funds we track held long positions in this stock, a change of -18% from the previous quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their holdings meaningfully.
Of the funds we track, Dreman Value Management, managed by David Dreman, holds the most valuable position in Montpelier Re Holdings Ltd. (NYSE:MRH). Dreman Value Management has a $19 million position in the stock, comprising 0.6% of its 13F portfolio. Coming in second is Royce & Associates, managed by Chuck Royce, which held a $17 million position; 0.1% of its 13F portfolio is allocated to the stock. Remaining peers that hold long positions include Martin Whitman’s Third Avenue Management, Ken Griffin’s Citadel Investment Group and John Thiessen’s Vertex One Asset Management.
Because Montpelier Re Holdings Ltd. (NYSE:MRH) has witnessed bearish sentiment from the entirety of the hedge funds we track, logic holds that there were a few hedge funds who were dropping their full holdings last quarter. Intriguingly, Cliff Asness’s AQR Capital Management said goodbye to the biggest investment of the 450+ funds we watch, totaling close to $7 million in stock.. Richard Schimel’s fund, Diamondback Capital, also said goodbye to its stock, about $2 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 2 funds last quarter.
What do corporate executives and insiders think about Montpelier Re Holdings Ltd. (NYSE:MRH)?
Insider trading activity, especially when it’s bullish, is best served when the primary stock in question has experienced transactions within the past 180 days. Over the last half-year time period, Montpelier Re Holdings Ltd. (NYSE:MRH) has experienced 2 unique insiders purchasing, and 4 insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to Montpelier Re Holdings Ltd. (NYSE:MRH). These stocks are Platinum Underwriters Holdings, Ltd. (NYSE:PTP), Hilltop Holdings Inc. (NYSE:HTH), Radian Group Inc (NYSE:RDN), Selective Insurance Group (NASDAQ:SIGI), and RLI Corp. (NYSE:RLI). All of these stocks are in the property & casualty insurance industry and their market caps are similar to MRH’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Platinum Underwriters Holdings, Ltd. (NYSE:PTP)||14||1||4|
|Hilltop Holdings Inc. (NYSE:HTH)||14||3||0|
|Radian Group Inc (NYSE:RDN)||12||1||0|
|Selective Insurance Group (NASDAQ:SIGI)||5||0||4|
|RLI Corp. (NYSE:RLI)||6||0||1|
With the results demonstrated by Insider Monkey’s research, everyday investors should always keep an eye on hedge fund and insider trading activity, and Montpelier Re Holdings Ltd. (NYSE:MRH) is an important part of this process.