Hedge Funds Are Buying Markel Corporation (MKL)

Is Markel Corporation (NYSE:MKL) a buy?

Now, according to many investors, hedge funds are assumed to be bloated, outdated financial vehicles of a forgotten age. Although there are more than 8,000 hedge funds in operation today, this site focuses on the upper echelon of this group, close to 525 funds. It is assumed that this group oversees the majority of all hedge funds’ total capital, and by watching their best picks, we’ve uncovered a few investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy beat 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 outperformed the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).

Just as useful, positive insider trading sentiment is a second way to analyze the investments you’re interested in. Just as you’d expect, there are plenty of motivations for an executive to sell shares of his or her company, but just one, very simple reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the useful potential of this strategy if “monkeys” know what to do (learn more here).

Furthermore, let’s analyze the newest info surrounding Markel Corporation (NYSE:MKL).

What does the smart money think about Markel Corporation (NYSE:MKL)?

At the end of the second quarter, a total of 22 of the hedge funds we track held long positions in this stock, a change of 47% from one quarter earlier. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their holdings meaningfully.

According to our 13F database, Select Equity Group, managed by Robert Joseph Caruso, holds the largest position in Markel Corporation (NYSE:MKL). Select Equity Group has a $201.7 million position in the stock, comprising 2.8% of its 13F portfolio. On Select Equity Group’s heels is Akre Capital Management, managed by Charles Akre, which held a $129.7 million position; 5.9% of its 13F portfolio is allocated to the company. Other hedge funds that hold long positions include Chuck Royce’s Royce & Associates, Brian Ashford-Russell and Tim Woolley’s Polar Capital and Murray Stahl’s Horizon Asset Management.

Now, certain bigger names have jumped into Markel Corporation (NYSE:MKL) headfirst. Select Equity Group, managed by Robert Joseph Caruso, assembled the most valuable position in Markel Corporation (NYSE:MKL). Select Equity Group had 201.7 million invested in the company at the end of the quarter. Charles Akre’s Akre Capital Management also initiated a $129.7 million position during the quarter. The other funds with new positions in the stock are Chuck Royce’s Royce & Associates, Brian Ashford-Russell and Tim Woolley’s Polar Capital, and Murray Stahl’s Horizon Asset Management.

Insider trading activity in Markel Corporation (NYSE:MKL)

Bullish insider trading is most useful when the company we’re looking at has seen transactions within the past six months. Over the latest half-year time frame, Markel Corporation (NYSE:MKL) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

We’ll also examine the relationship between both of these indicators in other stocks similar to Markel Corporation (NYSE:MKL). These stocks are Validus Holdings, Ltd. (NYSE:VR), American Financial Group (NYSE:AFG), HCC Insurance Holdings, Inc. (NYSE:HCC), Partnerre Ltd (NYSE:PRE), and Axis Capital Holdings Limited (NYSE:AXS). This group of stocks are the members of the property & casualty insurance industry and their market caps are closest to MKL’s market cap.

Using the results demonstrated by the previously mentioned tactics, regular investors should always keep one eye on hedge fund and insider trading sentiment, and Markel Corporation (NYSE:MKL) shareholders fit into this picture quite nicely.

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