Here is What Hedge Funds and Insiders Think About Arthur J. Gallagher & Co. (AJG)

Should Arthur J. Gallagher & Co. (NYSE:AJG) investors track the following data?

In the eyes of many of your fellow readers, hedge funds are seen as useless, outdated financial tools of a forgotten age. Although there are over 8,000 hedge funds in operation currently, Insider Monkey focuses on the bigwigs of this club, around 525 funds. It is assumed that this group has its hands on the lion’s share of all hedge funds’ total capital, and by tracking their highest quality picks, we’ve uncovered a number of investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per year 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 trumped the S&P 500 index by 33 percentage points in 11 months (find the details here).

Equally as useful, positive insider trading activity is another way to analyze the marketplace. As the old adage goes: there are plenty of motivations for a corporate insider to cut shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Many empirical studies have demonstrated the impressive potential of this strategy if investors know what to do (learn more here).

Now that that’s out of the way, we’re going to examine the recent info about Arthur J. Gallagher & Co. (NYSE:AJG).

How have hedgies been trading Arthur J. Gallagher & Co. (NYSE:AJG)?

In preparation for the third quarter, a total of 21 of the hedge funds we track were long in this stock, a change of 0% from the previous quarter. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their holdings substantially.

Out of the hedge funds we follow, Ken Griffin’s Citadel Investment Group had the most valuable position in Arthur J. Gallagher & Co. (NYSE:AJG), worth close to $132.7 million, accounting for 0.2% of its total 13F portfolio. Coming in second is Chuck Royce of Royce & Associates, with a $60.7 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining hedge funds with similar optimism include James Dondero’s Highland Capital Management, Phill Gross and Robert Atchinson’s Adage Capital Management and Israel Englander’s Millennium Management.

Due to the fact Arthur J. Gallagher & Co. (NYSE:AJG) has experienced dropping sentiment from upper-tier hedge fund managers, it’s safe to say that there lies a certain “tier” of funds that slashed their full holdings heading into Q2. Interestingly, Martin D. Sass’s MD Sass sold off the biggest investment of the “upper crust” of funds we track, worth an estimated $21 million in stock. Richard L. Haydon’s fund, Yield Capital Partners (Y/Cap Management), also said goodbye to its stock, about $5.3 million worth. These transactions are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Insider trading activity in Arthur J. Gallagher & Co. (NYSE:AJG)

Bullish insider trading is best served when the company in question has seen transactions within the past half-year. Over the last 180-day time period, Arthur J. Gallagher & Co. (NYSE:AJG) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll check out the relationship between both of these indicators in other stocks similar to Arthur J. Gallagher & Co. (NYSE:AJG). These stocks are Marsh & McLennan Companies, Inc. (NYSE:MMC), Aon PLC (NYSE:AON), Erie Indemnity Company (NASDAQ:ERIE), Willis Group Holdings PLC (NYSE:WSH), and Brown & Brown, Inc. (NYSE:BRO). All of these stocks are in the insurance brokers industry and their market caps resemble AJG’s market cap.

Using the results demonstrated by Insider Monkey’s tactics, average investors should always keep one eye on hedge fund and insider trading sentiment, and Arthur J. Gallagher & Co. (NYSE:AJG) applies perfectly to this mantra.

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Recommended reading:

Hedge Funds Are Buying Arthur J. Gallagher & Co. (AJG)

Insider Trading Activity

Hedge Fund Activity