Mercury General Corporation (MCY): Are Hedge Funds Right About This Stock?

Mercury General Corporation (NYSE:MCY) investors should pay attention to an increase in hedge fund sentiment of late.

To the average investor, there are many gauges shareholders can use to monitor Mr. Market. Some of the most under-the-radar 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 top money managers can outperform the S&P 500 by a solid amount (see just how much).

Equally as key, bullish insider trading sentiment is another way to parse down the stock market universe. There are many reasons for an insider to sell shares of his or her company, but only one, very simple reason why they would behave bullishly. Many academic studies have demonstrated the market-beating potential of this tactic if shareholders know where to look (learn more here).

With all of this in mind, let’s take a gander at the recent action regarding Mercury General Corporation (NYSE:MCY).

How are hedge funds trading Mercury General Corporation (NYSE:MCY)?

Heading into Q2, a total of 8 of the hedge funds we track were long in this stock, a change of 14% from the first quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their stakes meaningfully.

Of the funds we track, Ken Griffin’s Citadel Investment Group had the largest position in Mercury General Corporation (NYSE:MCY), worth close to $40 million, comprising 0.1% of its total 13F portfolio. The second largest stake is held by Jim Simons of Renaissance Technologies, with a $17.8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedge funds that are bullish include Chuck Royce’s Royce & Associates, D. E. Shaw’s D E Shaw and Louis Bacon’s Moore Global Investments.

As industrywide interest jumped, some big names were leading the bulls’ herd. D E Shaw, managed by D. E. Shaw, assembled the most valuable position in Mercury General Corporation (NYSE:MCY). D E Shaw had 1.7 million invested in the company at the end of the quarter. Louis Bacon’s Moore Global Investments also initiated a $1.2 million position during the quarter. The following funds were also among the new MCY investors: Matthew Tewksbury’s Stevens Capital Management and John Overdeck and David Siegel’s Two Sigma Advisors.

Insider trading activity in Mercury General Corporation (NYSE:MCY)

Insider buying is at its handiest when the company in question has seen transactions within the past 180 days. Over the last 180-day time frame, Mercury General Corporation (NYSE:MCY) has seen zero unique insiders purchasing, and 3 insider sales (see the details of insider trades here).

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