The Navigators Group, Inc (NAVG): Hedge Funds Are Bullish and Insiders Are Bearish, What Should You Do?

The Navigators Group, Inc (NASDAQ:NAVG) has seen an increase in activity from the world’s largest hedge funds recently.

To most stock holders, hedge funds are perceived as slow, outdated financial tools of years past. While there are more than 8000 funds in operation at the moment, we hone in on the elite of this group, about 450 funds. Most estimates calculate that this group oversees the lion’s share of all hedge funds’ total asset base, and by tracking their top equity investments, we have brought to light a few investment strategies that have historically outperformed the S&P 500 index. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum 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 outclassed the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).

Just as important, bullish insider trading sentiment is a second way to parse down the marketplace. There are many stimuli for an executive to downsize shares of his or her company, but just one, very obvious reason why they would buy. Various empirical studies have demonstrated the useful potential of this method if piggybackers understand what to do (learn more here).

With these “truths” under our belt, let’s take a glance at the recent action regarding The Navigators Group, Inc (NASDAQ:NAVG).

How have hedgies been trading The Navigators Group, Inc (NASDAQ:NAVG)?

At the end of the fourth quarter, a total of 6 of the hedge funds we track held long positions in this stock, a change of 100% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings substantially.

When looking at the hedgies we track, Royce & Associates, managed by Chuck Royce, holds the largest position in The Navigators Group, Inc (NASDAQ:NAVG). Royce & Associates has a $17.7 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is Diamond Hill Capital, managed by Ric Dillon, which held a $10.4 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining hedgies that hold long positions include Ken Griffin’s Citadel Investment Group, Jim Simons’s Renaissance Technologies and John Overdeck and David Siegel’s Two Sigma Advisors.

As industrywide interest jumped, key money managers were breaking ground themselves. Diamond Hill Capital, managed by Ric Dillon, created the most valuable position in The Navigators Group, Inc (NASDAQ:NAVG). Diamond Hill Capital had 10.4 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also made a $0.5 million investment in the stock during the quarter. The only other fund with a new position in the stock is John Overdeck and David Siegel’s Two Sigma Advisors.

How are insiders trading The Navigators Group, Inc (NASDAQ:NAVG)?

Insider buying is particularly usable when the company in question has seen transactions within the past 180 days. Over the latest six-month time frame, The Navigators Group, Inc (NASDAQ:NAVG) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to The Navigators Group, Inc (NASDAQ:NAVG). These stocks are Employers Holdings, Inc. (NYSE:EIG), Safety Insurance Group, Inc. (NASDAQ:SAFT), Greenlight Capital Re, Ltd. (NASDAQ:GLRE), Maiden Holdings, Ltd. (NASDAQ:MHLD), and Horace Mann Educators Corporation (NYSE:HMN). All of these stocks are in the property & casualty insurance industry and their market caps are similar to NAVG’s market cap.