What Hedge Funds and Insiders Think About Alleghany Corporation (Y)

Is Alleghany Corporation (NYSE:Y) worth buying?

At the moment, there are plenty of metrics shareholders can use to watch Mr. Market. Two of the most under-the-radar are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the elite hedge fund managers can trounce the broader indices by a healthy amount (see just how much).

Equally as crucial, optimistic insider trading activity is a second way to analyze the investments you’re interested in. Just as you’d expect, there are lots of incentives for an upper level exec to downsize shares of his or her company, but only one, very clear reason why they would initiate a purchase. Plenty of academic studies have demonstrated the useful potential of this tactic if you understand where to look (learn more here).

Keeping this in mind, let’s analyze the newest info surrounding Alleghany Corporation (NYSE:Y).

What does the smart money think about Alleghany Corporation (NYSE:Y)?

Heading into Q3, a total of 23 of the hedge funds we track were bullish in this stock, a change of 0% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their stakes substantially.

Out of the hedge funds we follow, Chuck Royce’s Royce & Associates had the biggest position in Alleghany Corporation (NYSE:Y), worth close to $230.3 million, comprising 0.7% of its total 13F portfolio. Coming in second is First Pacific Advisors LLC, managed by Robert Rodriguez and Steven Romick, which held a $114.2 million position; 1.2% of its 13F portfolio is allocated to the company. Other hedge funds with similar optimism include Martin Whitman’s Third Avenue Management, John Osterweis’s Osterweis Capital Management and Matt McLennan’s First Eagle Investment Management.

Due to the fact Alleghany Corporation (NYSE:Y) has witnessed declining interest from the top-tier hedge fund industry, logic holds that there were a few funds that elected to cut their entire stakes last quarter. At the top of the heap, Martin Whitman’s Third Avenue Management said goodbye to the largest position of all the hedgies we track, valued at close to $109.6 million in stock, and Mario Gabelli of GAMCO Investors was right behind this move, as the fund dumped about $1.5 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

How have insiders been trading Alleghany Corporation (NYSE:Y)?

Insider buying is at its handiest when the company in focus has experienced transactions within the past six months. Over the last six-month time period, Alleghany Corporation (NYSE:Y) has seen 1 unique insiders purchasing, and 3 insider sales (see the details of insider trades here).

We’ll go over the relationship between both of these indicators in other stocks similar to Alleghany Corporation (NYSE:Y). These stocks are Partnerre Ltd (NYSE:PRE), Everest Re Group Ltd (NYSE:RE), Cincinnati Financial Corporation (NASDAQ:CINF), W.R. Berkley Corporation (NYSE:WRB), and Arch Capital Group Ltd. (NASDAQ:ACGL). All of these stocks are in the property & casualty insurance industry and their market caps resemble Y’s market cap.