HCC Insurance Holdings, Inc. (HCC): Hedge Funds Are Bullish and Insiders Are Bearish, What Should You Do?

HCC Insurance Holdings, Inc. (NYSE:HCC) was in 15 hedge funds’ portfolio at the end of March. HCC investors should be aware of an increase in enthusiasm from smart money of late. There were 13 hedge funds in our database with HCC positions at the end of the previous quarter.

In today’s marketplace, there are dozens of metrics market participants can use to watch publicly traded companies. A duo of the most innovative are hedge fund and insider trading activity. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the elite hedge fund managers can trounce the S&P 500 by a superb amount (see just how much).

Equally as important, optimistic insider trading sentiment is a second way to parse down the stock market universe. Just as you’d expect, there are many stimuli for a corporate insider to cut shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Several academic studies have demonstrated the impressive potential of this strategy if “monkeys” know where to look (learn more here).

Keeping this in mind, we’re going to take a look at the latest action regarding HCC Insurance Holdings, Inc. (NYSE:HCC).

What does the smart money think about HCC Insurance Holdings, Inc. (NYSE:HCC)?

At the end of the first quarter, a total of 15 of the hedge funds we track were bullish in this stock, a change of 15% from one quarter earlier. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their stakes substantially.

Of the funds we track, Third Avenue Management, managed by Martin Whitman, holds the most valuable position in HCC Insurance Holdings, Inc. (NYSE:HCC). Third Avenue Management has a $52.1 million position in the stock, comprising 1% of its 13F portfolio. Coming in second is Ric Dillon of Diamond Hill Capital, with a $32.7 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other hedge funds that hold long positions include John W. Rogers’s Ariel Investments, Chuck Royce’s Royce & Associates and Cliff Asness’s AQR Capital Management.

Now, key hedge funds have been driving this bullishness. Millennium Management, managed by Israel Englander, initiated the biggest position in HCC Insurance Holdings, Inc. (NYSE:HCC). Millennium Management had 4.2 million invested in the company at the end of the quarter. SAC Subsidiary’s CR Intrinsic Investors also made a $3.2 million investment in the stock during the quarter. The other funds with brand new HCC positions are Glenn Russell Dubin’s Highbridge Capital Management and David Costen Haley’s HBK Investments.

Insider trading activity in HCC Insurance Holdings, Inc. (NYSE:HCC)

Bullish insider trading is particularly usable when the company we’re looking at has experienced transactions within the past half-year. Over the last half-year time frame, HCC Insurance Holdings, Inc. (NYSE:HCC) has seen zero unique insiders buying, and 3 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to HCC Insurance Holdings, Inc. (NYSE:HCC). These stocks are White Mountains Insurance Group Ltd (NYSE:WTM), Markel Corporation (NYSE:MKL), RenaissanceRe Holdings Ltd. (NYSE:RNR), Validus Holdings, Ltd. (NYSE:VR), and American Financial Group (NYSE:AFG). This group of stocks are the members of the property & casualty insurance industry and their market caps resemble HCC’s market cap.

With the returns demonstrated by our tactics, retail investors should always monitor hedge fund and insider trading sentiment, and HCC Insurance Holdings, Inc. (NYSE:HCC) is no exception.

Click here to learn why you should track hedge funds