Between June 25 and October 30th the Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by more than 14 percentage points as investors worried over the possible ramifications of rising interest rates. The hedge funds and institutional investors we track typically invest more in smaller-cap stocks than an average investor, and we have seen data that shows those funds paring back their overall exposure. Those funds cutting positions in small-caps is one reason why volatility has increased. In the following paragraphs, we take a closer look at what hedge funds and prominent investors think of Mercury General Corporation (NYSE:MCY) and see how the stock is affected by the recent hedge fund activity.
Mercury General Corporation (NYSE:MCY) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 8 hedge funds’ portfolios at the end of the third quarter of 2015. At the end of this article, we will also compare Mercury General Corporation (NYSE:MCY) to other stocks, including Deluxe Corporation (NYSE:DLX), Emcor Group Inc (NYSE:EME), and Rayonier Inc. (NYSE:RYN) to get a better sense of its popularity.
Follow Mercury General Corp (NYSE:MCY)
Follow Mercury General Corp (NYSE:MCY)
In the 21st century investor’s toolkit, there are numerous methods shareholders employ to appraise stocks. A couple of the most under-the-radar methods are hedge fund and insider trading moves. We have shown that, historically, those who follow the best picks of the elite fund managers can trounce the market by a superb amount (see the details here).
Keeping this in mind, we’re going to take a gander at the new action regarding Mercury General Corporation (NYSE:MCY).
How are hedge funds trading Mercury General Corporation (NYSE:MCY)?
At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, flat over the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Chuck Royce’s Royce & Associates has the most valuable position in Mercury General Corporation (NYSE:MCY), worth close to $8.9 million, comprising less than 0.1% of its total 13F portfolio. The second most bullish fund manager is Citadel Investment Group, managed by Ken Griffin, which holds a $2.8 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism consist of Cliff Asness’ AQR Capital Management, Renaissance Technologies, and Lawrence Sapanski’s Scoria Capital.
Because Mercury General Corporation (NYSE:MCY) has faced a bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of fund managers that slashed their full holdings in the third quarter. Interestingly, Jacob Gottlieb’s Visium Asset Management dropped the largest position of all the hedgies followed by Insider Monkey, valued at an estimated $1.1 million in CALL options. Matthew Hulsizer’s fund, PEAK6 Capital Management, also sold off its CALL options, about $0.6 million worth of options. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks similar to Mercury General Corporation (NYSE:MCY). These stocks are Deluxe Corporation (NYSE:DLX), Emcor Group Inc (NYSE:EME), Rayonier Inc. (NYSE:RYN), and BBVA Banco Frances S.A. (ADR) (NYSE:BFR). All of these stocks’ market caps match Mercury General Corporation (NYSE:MCY)’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DLX | 25 | 148096 | 0 |
| EME | 23 | 229515 | 3 |
| RYN | 14 | 410087 | -4 |
| BFR | 6 | 37140 | 0 |
As you can see, these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $206 million. That figure was $18 million in Mercury General Corporation (NYSE:MCY)’s case. Deluxe Corporation (NYSE:DLX) is the most popular stock in this table. On the other hand, BBVA Banco Frances S.A. (ADR) (NYSE:BFR) is the least popular one with only 6 bullish hedge fund positions. Mercury General Corporation (NYSE:MCY) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard Deluxe Corporation (NYSE:DLX) might be a better candidate to consider a long position.
