This Metric Says You Are Smart to Sell Meadowbrook Insurance Group, Inc. (MIG)

Meadowbrook Insurance Group, Inc. (NYSE:MIG) has experienced a decrease in activity from the world’s largest hedge funds lately.

In the eyes of most shareholders, hedge funds are seen as unimportant, old financial vehicles of years past. While there are over 8000 funds trading at the moment, we hone in on the leaders of this club, about 450 funds. It is widely believed that this group oversees the majority of the smart money’s total capital, and by paying attention to their highest performing picks, we have spotted 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 topped the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

MILLENNIUM MANAGEMENTJust as important, positive insider trading activity is another way to break down the stock market universe. There are a variety of incentives for a corporate insider to drop shares of his or her company, but only one, very simple reason why they would initiate a purchase. Various empirical studies have demonstrated the useful potential of this strategy if shareholders know what to do (learn more here).

Now, we’re going to take a peek at the recent action encompassing Meadowbrook Insurance Group, Inc. (NYSE:MIG).

How have hedgies been trading Meadowbrook Insurance Group, Inc. (NYSE:MIG)?

Heading into Q2, a total of 10 of the hedge funds we track were long in this stock, a change of -9% from one quarter earlier. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes considerably.

According to our comprehensive database, Jason F. Harris’s Kendall Square Capital had the largest position in Meadowbrook Insurance Group, Inc. (NYSE:MIG), worth close to $8.7 million, accounting for 5.8% of its total 13F portfolio. The second largest stake is held by Israel Englander of Millennium Management, with a $2.5 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedge funds with similar optimism include Jacob Gottlieb’s Visium Asset Management, Peter Algert and Kevin Coldiron’s Algert Coldiron Investors and John Overdeck and David Siegel’s Two Sigma Advisors.

Judging by the fact that Meadowbrook Insurance Group, Inc. (NYSE:MIG) has faced a declination in interest from hedge fund managers, logic holds that there was a specific group of funds that elected to cut their full holdings in Q1. Interestingly, Paul Tudor Jones’s Tudor Investment Corp dropped the biggest investment of the “upper crust” of funds we monitor, totaling close to $0.6 million in stock., and Jim Simons of Renaissance Technologies was right behind this move, as the fund cut about $0.4 million worth. These moves are interesting, as total hedge fund interest was cut by 1 funds in Q1.

Insider trading activity in Meadowbrook Insurance Group, Inc. (NYSE:MIG)

Insider trading activity, especially when it’s bullish, is most useful when the company in question has experienced transactions within the past half-year. Over the last half-year time period, Meadowbrook Insurance Group, Inc. (NYSE:MIG) has seen 8 unique insiders purchasing, and zero insider sales (see the details of insider trades here).

With the results exhibited by Insider Monkey’s studies, retail investors should always monitor hedge fund and insider trading sentiment, and Meadowbrook Insurance Group, Inc. (NYSE:MIG) is an important part of this process.

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