Now, according to many investors, hedge funds are viewed as useless, old investment tools of a forgotten age. Although there are In excess of 8,000 hedge funds in operation today, this site focuses on the bigwigs of this club, close to 525 funds. It is widely held that this group controls the majority of the smart money’s total assets, and by tracking their highest performing picks, we’ve found a few investment strategies that have historically beaten the S&P 500. 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 started sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).
Equally as crucial, positive insider trading activity is another way to analyze the financial markets. Just as you’d expect, there are a variety of incentives for a bullish insider to downsize shares of his or her company, but just one, very clear reason why they would buy. Plenty of academic studies have demonstrated the market-beating potential of this tactic if investors know what to do (learn more here).
What’s more, we’re going to study the recent info for Mercury General Corporation (NYSE:MCY).
Hedge fund activity in Mercury General Corporation (NYSE:MCY)
Heading into Q3, a total of 6 of the hedge funds we track were bullish in this stock, a change of -25% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their stakes considerably.
According to our 13F database, Ken Griffin’s Citadel Investment Group had the largest position in Mercury General Corporation (NYSE:MCY), worth close to $18 million, comprising less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Jim Simons of Renaissance Technologies, with a $12.6 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining hedge funds with similar optimism include Chuck Royce’s Royce & Associates, Israel Englander’s Millennium Management and D. E. Shaw’s D E Shaw.
Judging by the fact that Mercury General Corporation (NYSE:MCY) has witnessed dropping sentiment from upper-tier hedge fund managers, it’s easy to see that there is a sect of hedgies that slashed their full holdings at the end of the second quarter. At the top of the heap, Louis Bacon’s Moore Global Investments dumped the biggest position of the “upper crust” of funds we watch, totaling about $1.2 million in stock. Matthew Tewksbury’s fund, Stevens Capital Management, also cut its stock, about $0.5 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 2 funds at the end of the second quarter.
How are insiders trading Mercury General Corporation (NYSE:MCY)?
Insider buying is most useful when the company in focus 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 buying, and zero insider sales (see the details of insider trades here).
We’ll also review the relationship between both of these indicators 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 in the property & casualty insurance industry and their market caps are closest to MCY’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Kemper Corporation (NYSE:KMPR) | 10 | 0 | 0 |
| The Hanover Insurance Group, Inc. (NYSE:THG) | 14 | 0 | 0 |
| MBIA Inc. (NYSE:MBI) | 40 | 0 | 0 |
| Endurance Specialty Holdings Ltd. (NYSE:ENH) | 10 | 0 | 0 |
| Enstar Group Ltd. (NASDAQ:ESGR) | 12 | 0 | 0 |
Using the results demonstrated by the previously mentioned analyses, average investors must always watch hedge fund and insider trading activity, and Mercury General Corporation (NYSE:MCY) shareholders fit into this picture quite nicely.
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