Is HCC Insurance Holdings, Inc. (NYSE:HCC) a buy here? Investors who are in the know are turning less bullish. The number of bullish hedge fund positions dropped by 2 lately.
In the 21st century investor’s toolkit, there are tons of metrics market participants can use to analyze publicly traded companies. A duo of the most useful are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the best money managers can trounce their index-focused peers by a very impressive margin (see just how much).
Just as key, bullish insider trading activity is a second way to break down the financial markets. There are lots of stimuli for a bullish insider to cut shares of his or her company, but only one, very simple reason why they would initiate a purchase. Many academic studies have demonstrated the impressive potential of this tactic if piggybackers understand where to look (learn more here).
With all of this in mind, let’s take a gander at the key action encompassing HCC Insurance Holdings, Inc. (NYSE:HCC).
How are hedge funds trading HCC Insurance Holdings, Inc. (NYSE:HCC)?
At the end of the fourth quarter, a total of 12 of the hedge funds we track were bullish in this stock, a change of -14% from the previous quarter. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were upping their stakes significantly.
Of the funds we track, Martin Whitman’s Third Avenue Management had the largest position in HCC Insurance Holdings, Inc. (NYSE:HCC), worth close to $45 million, accounting for 1% of its total 13F portfolio. Sitting at the No. 2 spot is Ric Dillon of Diamond Hill Capital, with a $29 million position; 0% of its 13F portfolio is allocated to the stock. Some other peers that hold long positions include Chuck Royce’s Royce & Associates, John W. Rogers’s Ariel Investments and Cliff Asness’s AQR Capital Management.
Seeing as HCC Insurance Holdings, Inc. (NYSE:HCC) has faced a declination in interest from the entirety of the hedge funds we track, logic holds that there lies a certain “tier” of money managers who were dropping their full holdings last quarter. It’s worth mentioning that Israel Englander’s Millennium Management cut the biggest stake of the “upper crust” of funds we key on, worth an estimated $2 million in stock.. Paul Tudor Jones’s fund, Tudor Investment Corp, also sold off its stock, about $0 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 2 funds last quarter.
What have insiders been doing with HCC Insurance Holdings, Inc. (NYSE:HCC)?
Insider buying is particularly usable when the primary stock in question has experienced transactions within the past six months. Over the latest six-month time period, HCC Insurance Holdings, Inc. (NYSE:HCC) has experienced zero unique insiders purchasing, and 4 insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to HCC Insurance Holdings, Inc. (NYSE:HCC). These stocks are American Financial Group (NYSE:AFG), Validus Holdings, Ltd. (NYSE:VR), RenaissanceRe Holdings Ltd. (NYSE:RNR), Markel Corporation (NYSE:MKL), and White Mountains Insurance Group Ltd (NYSE:WTM). All of these stocks are in the property & casualty insurance industry and their market caps are closest to HCC’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|American Financial Group (NYSE:AFG)||10||0||10|
|Validus Holdings, Ltd. (NYSE:VR)||19||2||1|
|RenaissanceRe Holdings Ltd. (NYSE:RNR)||11||0||10|
|Markel Corporation (NYSE:MKL)||18||3||1|
|White Mountains Insurance Group Ltd (NYSE:WTM)||11||1||1|
With the returns exhibited by the aforementioned studies, everyday investors should always watch hedge fund and insider trading activity, and HCC Insurance Holdings, Inc. (NYSE:HCC) applies perfectly to this mantra.
Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.