Is MBIA Inc. (MBI) Going to Burn These Hedge Funds?

MBIA Inc. (NYSE:MBI) investors should pay attention to a decrease in activity from the world’s largest hedge funds of late.

In today’s marketplace, there are tons of indicators investors can use to monitor the equity markets. A duo of the most innovative are hedge fund and insider trading interest. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the top hedge fund managers can trounce the S&P 500 by a solid margin (see just how much).

Equally as beneficial, optimistic insider trading sentiment is a second way to parse down the stock market universe. Obviously, there are many stimuli for a bullish insider to drop shares of his or her company, but only one, very clear reason why they would buy. Plenty of academic studies have demonstrated the market-beating potential of this method if shareholders know where to look (learn more here).

Now, it’s important to take a peek at the key action surrounding MBIA Inc. (NYSE:MBI).

Hedge fund activity in MBIA Inc. (NYSE:MBI)

In preparation for this quarter, a total of 27 of the hedge funds we track held long positions in this stock, a change of 0% from one quarter earlier. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were boosting their holdings substantially.

Of the funds we track, Fairholme (FAIRX), managed by Bruce Berkowitz, holds the most valuable position in MBIA Inc. (NYSE:MBI). Fairholme (FAIRX) has a $322.7 million position in the stock, comprising 4.1% of its 13F portfolio. On Fairholme (FAIRX)’s heels is Ron Gutfleish of Elm Ridge Capital, with a $40.5 million position; 4.5% of its 13F portfolio is allocated to the stock. Some other hedgies that are bullish include Irving Kahn’s Kahn Brothers, Debra Fine’s Fine Capital Partners and Ken Griffin’s Citadel Investment Group.

Since MBIA Inc. (NYSE:MBI) has witnessed declining sentiment from hedge fund managers, logic holds that there lies a certain “tier” of fund managers who sold off their positions entirely at the end of the first quarter. Intriguingly, Debra Fine’s Fine Capital Partners sold off the largest investment of the 450+ funds we watch, totaling an estimated $15.1 million in call options. Daniel Gold’s fund, QVT Financial, also cut its stock, about $12.6 million worth. These transactions are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

How are insiders trading MBIA Inc. (NYSE:MBI)?

Insider trading activity, especially when it’s bullish, is at its handiest when the company in question has seen transactions within the past 180 days. Over the last half-year time period, MBIA Inc. (NYSE:MBI) has experienced zero unique insiders buying, and zero insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to MBIA Inc. (NYSE:MBI). These stocks are Platinum Underwriters Holdings, Ltd. (NYSE:PTP), Mercury General Corporation (NYSE:MCY), Enstar Group Ltd. (NASDAQ:ESGR), Endurance Specialty Holdings Ltd. (NYSE:ENH), and Kemper Corporation (NYSE:KMPR). This group of stocks are in the property & casualty insurance industry and their market caps are closest to MBI’s market cap.