Assured Guaranty Ltd. (NYSE:AGO) investors should pay attention to an increase in hedge fund interest in recent months.
According to most investors, hedge funds are seen as worthless, outdated financial vehicles of the past. While there are greater than 8000 funds in operation at present, we look at the aristocrats of this club, around 450 funds. It is estimated that this group oversees the lion’s share of the smart money’s total capital, and by watching their top picks, we have brought to light a number of investment strategies that have historically outpaced the S&P 500 index. Our small-cap hedge fund strategy outstripped 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 outclassed the S&P 500 index by 23.3 percentage points in 8 months (explore the details and some picks here).
Just as integral, optimistic insider trading activity is another way to parse down the investments you’re interested in. Just as you’d expect, there are a number of stimuli for an executive 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 market-beating potential of this method if shareholders know where to look (learn more here).
With all of this in mind, it’s important to take a gander at the key action surrounding Assured Guaranty Ltd. (NYSE:AGO).
How have hedgies been trading Assured Guaranty Ltd. (NYSE:AGO)?
At the end of the first quarter, a total of 33 of the hedge funds we track held long positions in this stock, a change of 18% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their holdings considerably.
When looking at the hedgies we track, Wilbur Ross’s Invesco Private Capital (WL Ross) had the most valuable position in Assured Guaranty Ltd. (NYSE:AGO), worth close to $408.8 million, comprising 41.2% of its total 13F portfolio. On Invesco Private Capital (WL Ross)’s heels is Louis Bacon of Moore Global Investments, with a $148.4 million position; 2.4% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism include Debra Fine’s Fine Capital Partners, Brian Jackelow’s SAB Capital Management and Ric Dillon’s Diamond Hill Capital.
As one would reasonably expect, specific money managers were leading the bulls’ herd. SAB Capital Management, managed by Brian Jackelow, created the largest position in Assured Guaranty Ltd. (NYSE:AGO). SAB Capital Management had 112.2 million invested in the company at the end of the quarter. Matt Sirovich and Jeremy Mindich’s Scopia Capital also initiated a $98.6 million position during the quarter. The other funds with brand new AGO positions are Bruce Kovner’s Caxton Associates LP, Anthony Bozza’s Lakewood Capital Management, and Wayne Cooperman’s Cobalt Capital Management.
How have insiders been trading Assured Guaranty Ltd. (NYSE:AGO)?
Insider buying is most useful when the company we’re looking at has experienced transactions within the past 180 days. Over the latest six-month time frame, Assured Guaranty Ltd. (NYSE:AGO) has experienced zero unique insiders purchasing, and 2 insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to Assured Guaranty Ltd. (NYSE:AGO). These stocks are OneBeacon Insurance Group, Ltd. (NYSE:OB), Fidelity National Financial Inc (NYSE:FNF), and Old Republic International Corporation (NYSE:ORI). This group of stocks belong to the surety & title insurance industry and their market caps are similar to AGO’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|OneBeacon Insurance Group, Ltd. (NYSE:OB)||5||0||0|
|Fidelity National Financial Inc (NYSE:FNF)||31||0||3|
|Old Republic International Corporation (NYSE:ORI)||20||2||1|
With the returns exhibited by the aforementioned studies, everyday investors must always pay attention to hedge fund and insider trading sentiment, and Assured Guaranty Ltd. (NYSE:AGO) applies perfectly to this mantra.