Heartland Advisors, an investment management company, released its “Heartland Mid Cap Value Strategy” fourth quarter 2022 investor letter. A copy of the same can be downloaded here. In the fourth quarter, the strategy returned a 12.38% (Net of Advisory Fees) compared to a 10.45% gain for the Russell Midcap Value Index. The stock selection in Real Estate, Healthcare, and Energy sectors led to the strategy’s outperformance in the quarter. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.
Heartland Mid Cap Value Strategy highlighted stocks like RenaissanceRe Holdings Ltd. (NYSE:RNR) in its Q4 2022 investor letter. Headquartered in Pembroke, Bermuda, RenaissanceRe Holdings Ltd. (NYSE:RNR) is an insurance and reinsurance products provider. On March 9, 2023, RenaissanceRe Holdings Ltd. (NYSE:RNR) stock closed at $202.37 per share. One-month return of RenaissanceRe Holdings Ltd. (NYSE:RNR) was -6.63%, and its shares gained 43.50% of their value over the last 52 weeks. RenaissanceRe Holdings Ltd. (NYSE:RNR) has a market capitalization of $8.848 billion.
Heartland Mid Cap Value Strategy made the following comment about RenaissanceRe Holdings Ltd. (NYSE:RNR) in its Q4 2022 investor letter:
“RenaissanceRe Holdings Ltd. (NYSE:RNR) is a reinsurance underwriter focused on global property catastrophe and casualty & specialty (C&S) lines of risk. Reinsurance involves selling coverage to primary insurers for protection against excess losses. It is largely a commodity with industry economics heavily dependent upon the supply of and demand for capital. Prior to 2017, property catastrophe industry losses were abnormally low, resulting in excess returns and capital entering the industry. More recently, though, property cat losses have been unusually high. Combined with weak pricing, this has resulted in significant industry losses.
In response to the irrationally competitive market, RNR’s management team made the decision to pull back capital for underwriting and reallocated it to repurchase shares. This pivot piqued our interest last year. We began purchasing the stock in the third quarter, prior to Hurricane Ian. We added to our position when shares fell on fears that Ian could result in massive losses for property insurers. Our thinking was that RNR had sufficient capital to sustain cat losses from Ian, and if the storm proved to be bad, it would further catalyze a hard market. Hurricane Ian turned out to be the costliest hurricane in U.S. history, resulting in industry losses forecast to be well in excess of $50 billion. After RNR reported its Q3 cat losses, we were quickly rewarded as pricing for the important January renewal period shot up in excess of 25%, and the stock rallied more than 40% from the Ian lows. RNR still trades at a price/earnings ratio of 8.3, based on the next 12 months’ profit forecasts, which is below the company’s long-term median valuation of 9 times earnings.”
RenaissanceRe Holdings Ltd. (NYSE:RNR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 26 hedge fund portfolios held RenaissanceRe Holdings Ltd. (NYSE:RNR) at the end of the fourth quarter which was 32 in the previous quarter.
We discussed RenaissanceRe Holdings Ltd. (NYSE:RNR) in another article and shared TimesSquare Capital Management’s views on the company. In addition, please check out our hedge fund investor letters Q4 2022 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
