In this article we will take a look at whether hedge funds think Eagle Materials, Inc. (NYSE:EXP) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Hedge fund interest in Eagle Materials, Inc. (NYSE:EXP) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that EXP isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). At the end of this article we will also compare EXP to other stocks including Spirit Realty Capital Inc (NYSE:SRC), Novanta Inc. (NASDAQ:NOVT), and EngageSmart, LLC (NYSE:ESMT) to get a better sense of its popularity.
Chuck Royce of Royce & Associates
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind let’s view the recent hedge fund action encompassing Eagle Materials, Inc. (NYSE:EXP).
Do Hedge Funds Think EXP Is A Good Stock To Buy Now?
At third quarter’s end, a total of 36 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2021. By comparison, 31 hedge funds held shares or bullish call options in EXP a year ago. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
Among these funds, Anomaly Capital Management held the most valuable stake in Eagle Materials, Inc. (NYSE:EXP), which was worth $29.8 million at the end of the third quarter. On the second spot was Millennium Management which amassed $19.6 million worth of shares. Royce & Associates, Soros Fund Management, and Waratah Capital Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Birch Run Capital allocated the biggest weight to Eagle Materials, Inc. (NYSE:EXP), around 6.79% of its 13F portfolio. Mountaineer Partners Management is also relatively very bullish on the stock, earmarking 6.65 percent of its 13F equity portfolio to EXP.
Because Eagle Materials, Inc. (NYSE:EXP) has witnessed declining sentiment from the aggregate hedge fund industry, it’s safe to say that there were a few hedge funds that decided to sell off their full holdings heading into Q4. Intriguingly, Martin Whitman’s Third Avenue Management dumped the biggest investment of the “upper crust” of funds watched by Insider Monkey, worth about $12.4 million in stock. Zilvinas Mecelis’s fund, Covalis Capital, also said goodbye to its stock, about $10.6 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks similar to Eagle Materials, Inc. (NYSE:EXP). We will take a look at Spirit Realty Capital Inc (NYSE:SRC), Novanta Inc. (NASDAQ:NOVT), EngageSmart, LLC (NYSE:ESMT), I-Mab (NASDAQ:IMAB), Medallia, Inc. (NYSE:MDLA), Canopy Growth Corporation (NYSE:CGC), and nVent Electric plc (NYSE:NVT). All of these stocks’ market caps match EXP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SRC | 23 | 384118 | 4 |
| NOVT | 15 | 98422 | -1 |
| ESMT | 28 | 241632 | 28 |
| IMAB | 18 | 837725 | 0 |
| MDLA | 29 | 889127 | 6 |
| CGC | 17 | 90312 | 1 |
| NVT | 34 | 552905 | 4 |
| Average | 23.4 | 442034 | 6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.4 hedge funds with bullish positions and the average amount invested in these stocks was $442 million. That figure was $188 million in EXP’s case. nVent Electric plc (NYSE:NVT) is the most popular stock in this table. On the other hand Novanta Inc. (NASDAQ:NOVT) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Eagle Materials, Inc. (NYSE:EXP) is more popular among hedge funds. Our overall hedge fund sentiment score for EXP is 81.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks returned 28.6% in 2021 through November 30th but still managed to beat the market by 5.6 percentage points. Hedge funds were also right about betting on EXP as the stock returned 17.6% since the end of September (through 11/30) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
