If you were to ask many investors, hedge funds are viewed as useless, outdated financial tools of an era lost to time. Although there are over 8,000 hedge funds with their doors open today, this site looks at the masters of this club, close to 525 funds. It is widely held that this group controls the lion’s share of the hedge fund industry’s total assets, and by tracking their highest quality investments, we’ve identified a few investment strategies that have historically outpaced the broader indices. 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 outperformed the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).
Equally as key, positive insider trading activity is another way to look at the investments you’re interested in. There are lots of motivations for an executive to cut shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the valuable potential of this tactic if shareholders understand what to do (learn more here).
Keeping this in mind, we’re going to examine the recent info about Montpelier Re Holdings Ltd. (NYSE:MRH).
Hedge fund activity in Montpelier Re Holdings Ltd. (NYSE:MRH)
At Q2’s end, a total of 12 of the hedge funds we track were bullish in this stock, a change of -8% from the first quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings considerably.
According to our 13F database, John Thiessen’s Vertex One Asset Management had the most valuable position in Montpelier Re Holdings Ltd. (NYSE:MRH), worth close to $13.9 million, accounting for 2.4% of its total 13F portfolio. The second largest stake is held by Cliff Asness of AQR Capital Management, with a $12.8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedge funds that hold long positions include Chuck Royce’s Royce & Associates, David Dreman’s Dreman Value Management and Ken Griffin’s Citadel Investment Group.
As Montpelier Re Holdings Ltd. (NYSE:MRH) has witnessed declining interest from the top-tier hedge fund industry, we can see that there lies a certain “tier” of hedgies who were dropping their positions entirely heading into Q2. Interestingly, Martin Whitman’s Third Avenue Management dumped the largest stake of all the hedgies we key on, worth close to $4.6 million in stock, and Brian Taylor of Pine River Capital Management was right behind this move, as the fund dropped about $4.3 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 1 funds heading into Q2.
Insider trading activity in Montpelier Re Holdings Ltd. (NYSE:MRH)
Insider buying is most useful when the company in question has experienced transactions within the past six months. Over the last half-year time frame, Montpelier Re Holdings Ltd. (NYSE:MRH) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).
We’ll also review the relationship between both of these indicators 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) | 11 | 0 | 0 |
| Hilltop Holdings Inc. (NYSE:HTH) | 14 | 0 | 0 |
| Radian Group Inc (NYSE:RDN) | 29 | 0 | 0 |
| Selective Insurance Group (NASDAQ:SIGI) | 4 | 0 | 0 |
| RLI Corp. (NYSE:RLI) | 6 | 0 | 0 |
Using the results demonstrated by the previously mentioned research, regular investors should always track hedge fund and insider trading sentiment, and Montpelier Re Holdings Ltd. (NYSE:MRH) shareholders fit into this picture quite nicely.
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