Hedge Funds Are Betting On White Mountains Insurance Group Ltd (WTM)

Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about White Mountains Insurance Group Ltd (NYSE:WTM).

White Mountains Insurance Group Ltd (NYSE:WTM) was in 19 hedge funds’ portfolios at the end of March. The all time high for this statistic is 20. WTM has experienced an increase in support from the world’s most elite money managers recently. There were 16 hedge funds in our database with WTM positions at the end of the fourth quarter. Our calculations also showed that WTM isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

To the average investor there are a large number of methods stock market investors employ to assess stocks. Some of the most underrated methods are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the best picks of the elite fund managers can outperform the broader indices by a superb amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

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At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to take a look at the recent hedge fund action encompassing White Mountains Insurance Group Ltd (NYSE:WTM).

Do Hedge Funds Think WTM Is A Good Stock To Buy Now?

At the end of March, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 19% from the previous quarter. On the other hand, there were a total of 16 hedge funds with a bullish position in WTM a year ago. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

Is WTM A Good Stock To Buy?

Among these funds, Wallace Capital Management held the most valuable stake in White Mountains Insurance Group Ltd (NYSE:WTM), which was worth $84.8 million at the end of the fourth quarter. On the second spot was Wallace Capital Management which amassed $84.8 million worth of shares. Madison Avenue Partners, Elkhorn Partners, and Renaissance Technologies were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position 0 allocated the biggest weight to White Mountains Insurance Group Ltd (NYSE:WTM), around 15.28% of its 13F portfolio. 0 is also relatively very bullish on the stock, dishing out 11.12 percent of its 13F equity portfolio to WTM.

As one would reasonably expect, key money managers were breaking ground themselves. Madison Avenue Partners, managed by Eli Samaha, initiated the most outsized position in White Mountains Insurance Group Ltd (NYSE:WTM). Madison Avenue Partners had $36.3 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also made a $0.9 million investment in the stock during the quarter. The following funds were also among the new WTM investors: Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Greg Eisner’s Engineers Gate Manager, and Karim Abbadi and Edward McBride’s Centiva Capital.

Let’s now take a look at hedge fund activity in other stocks similar to White Mountains Insurance Group Ltd (NYSE:WTM). These stocks are Intercorp Financial Services Inc. (NYSE:IFS), Apellis Pharmaceuticals, Inc. (NASDAQ:APLS), Meritage Homes Corp (NYSE:MTH), iRobot Corporation (NASDAQ:IRBT), Blackbaud, Inc. (NASDAQ:BLKB), InnovAge Holding Corp. (NASDAQ:INNV), and Weingarten Realty Investors (NYSE:WRI). All of these stocks’ market caps resemble WTM’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IFS 5 35452 -1
APLS 34 696117 -1
MTH 23 335864 -7
IRBT 17 148076 -5
BLKB 20 109333 1
INNV 32 190847 32
WRI 14 200031 1
Average 20.7 245103 2.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.7 hedge funds with bullish positions and the average amount invested in these stocks was $245 million. That figure was $305 million in WTM’s case. Apellis Pharmaceuticals, Inc. (NASDAQ:APLS) is the most popular stock in this table. On the other hand Intercorp Financial Services Inc. (NYSE:IFS) is the least popular one with only 5 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. Our overall hedge fund sentiment score for WTM is 60.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and surpassed the market again by 7.7 percentage points. Unfortunately WTM wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); WTM investors were disappointed as the stock returned 1% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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Disclosure: None. This article was originally published at Insider Monkey.