Should You Buy White Mountains Insurance Group Ltd (WTM)?

As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Cove Street Capital, led by Jeffrey Bronchick, created the largest position in White Mountains Insurance Group Ltd (NYSE:WTM). Cove Street Capital had $1.8 million invested in the company at the end of the quarter. Andrew Weiss’s Weiss Asset Management also made a $0.2 million investment in the stock during the quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as White Mountains Insurance Group Ltd (NYSE:WTM) but similarly valued. These stocks are Credit Acceptance Corp. (NASDAQ:CACC), Yamana Gold Inc. (USA) (NYSE:AUY), Techne Corporation (NASDAQ:TECH), and The Madison Square Garden Co (NASDAQ:MSG). This group of stocks’ market values are similar to WTM’s market value.

As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $533 million. That figure was $182 million in WTM’s case. The Madison Square Garden Co (NASDAQ:MSG) is the most popular stock in this table. On the other hand Techne Corporation (NASDAQ:TECH) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks White Mountains Insurance Group Ltd (NYSE:WTM) is even less popular than TECH. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

Disclosure: None