Is MBIA Inc. (NYSE:MBI) the right investment to pursue these days? Money managers are in a pessimistic mood. The number of long hedge fund positions were cut by 5 recently.
In the eyes of most traders, hedge funds are assumed to be underperforming, outdated investment tools of the past. While there are over 8000 funds trading today, we at Insider Monkey hone in on the elite of this club, around 450 funds. It is estimated that this group has its hands on the majority of the smart money’s total capital, and by tracking their best picks, we have spotted a number of investment strategies that have historically outstripped Mr. Market. 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 started sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 25 percentage points in 6.5 month (see the details here).
Equally as beneficial, positive insider trading activity is another way to parse down the stock market universe. As the old adage goes: there are lots of reasons for a bullish insider to get rid of shares of his or her company, but only one, very clear reason why they would behave bullishly. Plenty of empirical studies have demonstrated the valuable potential of this tactic if “monkeys” understand where to look (learn more here).
Consequently, it’s important to take a gander at the recent action encompassing MBIA Inc. (NYSE:MBI).
How have hedgies been trading MBIA Inc. (NYSE:MBI)?
Heading into 2013, a total of 25 of the hedge funds we track were bullish in this stock, a change of -17% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their holdings considerably.
According to our comprehensive database, Bruce Berkowitz’s Fairholme (FAIRX) had the most valuable position in MBIA Inc. (NYSE:MBI), worth close to $334 million billion, accounting for 4.8% of its total 13F portfolio. On Fairholme (FAIRX)’s heels is Ron Gutfleish of Elm Ridge Capital, with a $31 million position; 2.2% of its 13F portfolio is allocated to the stock. Other hedge funds that hold long positions include Irving Kahn’s Kahn Brothers, Jim Simons’s Renaissance Technologies and Debra Fine’s Fine Capital Partners.
Since MBIA Inc. (NYSE:MBI) has faced declining sentiment from hedge fund managers, we can see that there were a few money managers that decided to sell off their full holdings in Q4. Intriguingly, John London and Steve Weinstein’s SuttonBrook Capital dumped the largest position of the 450+ funds we key on, totaling an estimated $14 million in stock.. Richard Perry’s fund, Perry Capital, also said goodbye to its stock, about $14 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 5 funds in Q4.
Insider trading activity in MBIA Inc. (NYSE:MBI)
Insider purchases made by high-level executives is most useful when the company we’re looking at has experienced transactions within the past half-year. Over the latest half-year time frame, MBIA Inc. (NYSE:MBI) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
With the results shown by our time-tested strategies, everyday investors must always keep an eye on hedge fund and insider trading activity, and MBIA Inc. (NYSE:MBI) applies perfectly to this mantra.
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.