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Hedge Fund Sentiment Has This To Say About White Mountains Insurance Group Ltd (WTM)

How do we determine whether White Mountains Insurance Group Ltd (NYSE:WTM) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.

White Mountains Insurance Group Ltd (NYSE:WTM) was in 16 hedge funds’ portfolios at the end of the third quarter of 2015. White Mountains Insurance Group Ltd has seen an increase in hedge fund sentiment lately. There were 14 hedge funds in our database with White Mountains Insurance Group Ltd holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as NewMarket Corporation (NYSE:NEU), Tempur-Pedic International Inc. (NYSE:TPX), and PacWest Bancorp (NASDAQ:PACW) to gather more data points.

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Today there are several tools shareholders use to assess publicly traded companies. A duo of the most useful tools are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the best money managers can outperform the market by a very impressive amount (see the details here).

Keeping this in mind, we’re going to view the key action surrounding White Mountains Insurance Group Ltd (NYSE:WTM).

What does the smart money think about White Mountains Insurance Group Ltd (NYSE:WTM)?

Heading into Q4, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a 14% rise from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings substantially (or had already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Martin Whitman’s Third Avenue Management has the biggest position in White Mountains Insurance Group Ltd (NYSE:WTM), worth close to $82.1 million, amounting to 2.2% of its total 13F portfolio. On Third Avenue Management’s heels is Wallace Capital Management, managed by Scott Wallace, which holds a $67.7 million position; the fund has 12.4% of its 13F portfolio invested in the stock. Remaining peers with similar optimism include Renaissance Technologies, Alan S. Parsow’s Elkhorn Partners, and Lawrence Sapanski’s Scoria Capital.

With general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, created the most outsized position in White Mountains Insurance Group Ltd (NYSE:WTM). Citadel Investment Group had $7.9 million invested in the company at the end of the quarter. Peter Muller’s PDT Partners also made a $2.8 million investment in the stock during the quarter. The only other fund with a brand new White Mountains Insurance Group Ltd position is Dmitry Balyasny’s Balyasny Asset Management.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as White Mountains Insurance Group Ltd (NYSE:WTM) but similarly valued. We will take a look at NewMarket Corporation (NYSE:NEU), Tempur-Pedic International Inc. (NYSE:TPX), PacWest Bancorp (NASDAQ:PACW), and Brunswick Corporation (NYSE:BC). All of these stocks’ market caps are similar to White Mountains Insurance Group Ltd’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NEU 14 78339 0
TPX 34 1212492 7
PACW 20 231687 -2
BC 31 321515 3

As you can see these stocks had an average of 24.75 hedge funds with bullish positions and the average amount invested in these stocks was $461 million. That figure was $246 million in White Mountains Insurance Group Ltd’s case. Tempur-Pedic International Inc. (NYSE:TPX) is the most popular stock in this table. On the other hand NewMarket Corporation (NYSE:NEU) is the least popular one with only 14 bullish hedge fund positions. White Mountains Insurance Group Ltd (NYSE:WTM) is not the least popular stock in this group but hedge fund interest is still below average, as is the amount of money invested in it. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard Tempur-Pedic International Inc. might be a better candidate to consider for a long position.

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