Will The Hanover Insurance Group's (THG) Positive Initiatives Drive Success?

Heartland Advisors, an investment management company, released its “Heartland Value Plus Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. The fund declined 8.23% in the quarter, compared to a 7.7% loss for the Russell 2000 Value Index. The firm believes, this is a patient market, as expectations of better demand dynamics were put on hold during the quarter due to slowdown fears. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its first-quarter 2025 investor letter, Heartland Value Plus Fund highlighted stocks such as The Hanover Insurance Group, Inc. (NYSE:THG). The Hanover Insurance Group, Inc. (NYSE:THG) is a US-based insurance company that offers various property and casualty insurance products and services. The one-month return of The Hanover Insurance Group, Inc. (NYSE:THG) was -5.48%, and its shares gained 27.09% of their value over the last 52 weeks. On April 17, 2025, The Hanover Insurance Group, Inc. (NYSE:THG) stock closed at $161.67 per share with a market capitalization of $5.826 billion.

Heartland Value Plus Fund stated the following regarding The Hanover Insurance Group, Inc. (NYSE:THG) in its Q1 2025 investor letter:

"A key focus of our selectivity has been driven by self-help. An example is The Hanover Insurance Group, Inc. (NYSE:THG), a property and casualty insurer. The company stumbled in recent years, thanks to heavy exposure to the upper Midwest, which has been hit with severe weather including deadly hailstorms. After falling short of earnings estimates recently due to the cost of damaging storms, the company has been taking steps to reduce its exposure to catastrophic events — for instance by writing less insurance in at-risk geographies and raising deductibles. THG has also made other money-saving moves, such as requiring customers to use sensors for early detection of water leaks in their homes. Those efforts led to strong fourth quarter results. In Q4, catastrophic losses contributed just 2.1% of Hanover’s combined ratio, a key measure of profitability. That was substantially less than it has been in recent years.

Meanwhile, Hanover has restructured its investment portfolio, which accounts for 60% of its earnings, to benefit from higher yields. This should go a long way toward boosting its net investment income this year. Yet despite these positive steps, the stock, with a steadily growing dividend, still trades at approximately 12 times 2025 earnings per share."

The Hanover Insurance Group, Inc. (NYSE:THG) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 31 hedge fund portfolios held The Hanover Insurance Group, Inc. (NYSE:THG) at the end of the fourth quarter which was 24 in the previous quarter. While we acknowledge the potential of The Hanover Insurance Group, Inc. (NYSE:THG) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In another article, we covered The Hanover Insurance Group, Inc. (NYSE:THG) and shared the list of safest dividend stocks you might be interested in adding to your portfolio. In addition, please check out our hedge fund investor letters Q1 2025 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.