Is XL Group plc (NYSE:XL) a buy?
In the eyes of many market players, hedge funds are perceived as overrated, outdated investment vehicles of a forgotten age. Although there are more than 8,000 hedge funds trading in present day, this site aim at the masters of this group, around 525 funds. It is widely held that this group oversees the majority of the hedge fund industry’s total assets, and by tracking their best equity investments, we’ve identified a number of investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per annum 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 outpaced the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).
Just as key, optimistic insider trading activity is a second way to analyze the stock market universe. Obviously, there are a number of stimuli for an insider to downsize shares of his or her company, but just one, very clear reason why they would behave bullishly. Many academic studies have demonstrated the valuable potential of this tactic if shareholders understand what to do (learn more here).
Now that that’s out of the way, we’re going to analyze the latest info for XL Group plc (NYSE:XL).
What does the smart money think about XL Group plc (NYSE:XL)?
At Q2’s end, a total of 27 of the hedge funds we track were bullish in this stock, a change of 4% from the first quarter. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were boosting their holdings considerably.
According to our 13F database, Leon Cooperman’s Omega Advisors had the biggest position in XL Group plc (NYSE:XL), worth close to $110.5 million, comprising 1.7% of its total 13F portfolio. On Omega Advisors’s heels is Ken Griffin of Citadel Investment Group, with a $54.7 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other hedgies that hold long positions include Kevin Michael Ulrich’s Anchorage Advisors, Phill Gross and Robert Atchinson’s Adage Capital Management and Andrew Sandler’s Sandler Capital Management.
As one would understandably expect, particular hedge funds have been driving this bullishness. Omega Advisors, managed by Leon Cooperman, initiated the most valuable position in XL Group plc (NYSE:XL). Omega Advisors had 110.5 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $54.7 million investment in the stock during the quarter. The following funds were also among the new XL investors: Kevin Michael Ulrich’s Anchorage Advisors, Phill Gross and Robert Atchinson’s Adage Capital Management, and Andrew Sandler’s Sandler Capital Management.
How are insiders trading XL Group plc (NYSE:XL)?
Insider buying made by high-level executives is particularly usable when the company in focus has seen transactions within the past half-year. Over the last six-month time period, XL Group plc (NYSE:XL) has seen zero unique insiders buying, and 4 insider sales (see the details of insider trades here).
We’ll also take a look at the relationship between both of these indicators in other stocks similar to XL Group plc (NYSE:XL). These stocks are Arch Capital Group Ltd. (NASDAQ:ACGL), Hartford Financial Services Group Inc (NYSE:HIG), Cincinnati Financial Corporation (NASDAQ:CINF), Everest Re Group Ltd (NYSE:RE), and Cna Financial Corp (NYSE:CNA). This group of stocks are the members of the property & casualty insurance industry and their market caps are similar to XL’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Arch Capital Group Ltd. (NASDAQ:ACGL)||12||2||3|
|Hartford Financial Services Group Inc (NYSE:HIG)||43||0||0|
|Cincinnati Financial Corporation (NASDAQ:CINF)||17||2||0|
|Everest Re Group Ltd (NYSE:RE)||22||0||3|
|Cna Financial Corp (NYSE:CNA)||15||0||2|
Using the results explained by the previously mentioned tactics, average investors must always pay attention to hedge fund and insider trading activity, and XL Group plc (NYSE:XL) applies perfectly to this mantra.