MGIC Investment Corp. (NYSE:MTG) was in 20 hedge funds’ portfolio at the end of the fourth quarter of 2012. MTG has seen a decrease in hedge fund sentiment lately. There were 22 hedge funds in our database with MTG holdings at the end of the previous quarter.
According to most stock holders, hedge funds are perceived as slow, old investment vehicles of years past. While there are greater than 8000 funds with their doors open today, we at Insider Monkey look at the aristocrats of this club, around 450 funds. It is estimated that this group oversees most of all hedge funds’ total asset base, and by watching their best stock picks, we have unsheathed a number of investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points annually 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 trumped the S&P 500 index by 25 percentage points in 6.5 month (see the details here).
Equally as key, positive insider trading sentiment is another way to break down the stock market universe. There are plenty of motivations for an executive to drop shares of his or her company, but just one, very clear reason why they would initiate a purchase. Various empirical studies have demonstrated the impressive potential of this tactic if investors understand what to do (learn more here).
Keeping this in mind, let’s take a look at the recent action regarding MGIC Investment Corp. (NYSE:MTG).
How have hedgies been trading MGIC Investment Corp. (NYSE:MTG)?
At year’s end, a total of 20 of the hedge funds we track were long in this stock, a change of -9% from the third quarter. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their holdings substantially.
Of the funds we track, Blue Ridge Capital, managed by John Griffin, holds the most valuable position in MGIC Investment Corp. (NYSE:MTG). Blue Ridge Capital has a $26 million position in the stock, comprising 0.4% of its 13F portfolio. Coming in second is Boaz Weinstein of Saba Capital, with a $24 million position; 0.3% of its 13F portfolio is allocated to the stock. Other hedge funds with similar optimism include Kerr Neilson’s Platinum Asset Management, and Chuck Royce’s Royce & Associates.
Because MGIC Investment Corp. (NYSE:MTG) has faced falling interest from hedge fund managers, it’s easy to see that there lies a certain “tier” of funds who sold off their entire stakes in Q4. It’s worth mentioning that Michael Platt and William Reeves’s BlueCrest Capital Mgmt. dropped the biggest position of the 450+ funds we watch, worth about $3 million in stock.. Thomas Lenox Kempner’s fund, Davidson Kempner, also said goodbye to its stock, about $2 million worth. These moves are interesting, as total hedge fund interest fell by 2 funds in Q4.
How are insiders trading MGIC Investment Corp. (NYSE:MTG)?
Insider trading activity, especially when it’s bullish, is at its handiest when the company in question has experienced transactions within the past half-year. Over the last six-month time frame, MGIC Investment Corp. (NYSE:MTG) has experienced 6 unique insiders purchasing, and 1 insider sales (see the details of insider trades here).
With the returns shown by the aforementioned research, everyday investors should always monitor hedge fund and insider trading sentiment, and MGIC Investment Corp. (NYSE:MTG) shareholders fit into this picture quite nicely.
Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.