Geoffrey Raynor’s Q Investments has filed its 13F with the SEC for the reporting period of March 31, 2015, disclosing a public equity portfolio valued at $547.50 million. Raynor is the founding partner of the firm, which he founded the investment firm in 1994. The investment firm has over $3.41 billion in assets under management and works out of its offices in Fort Worth, Texas. Raynor’s fund is most heavily invested in the technology sector overall, though the bulk of his top picks are real estate-related, and it’s these picks which we’ll look at in this article, them being M/I Homes Inc (NYSE:MHO), LGI Homes Inc (NASDAQ:LGIH), and Forestar Group Inc. (NYSE:FOR). All of these companies are micro-cap investments, with M/I Homes Inc (NYSE:MHO) being the highest valued of the three with a market cap of $609.39 million.
LovePHY/Shutterstock.com
Why are we interested in the 13F filings of a select group of hedge funds? We use these filings to determine the top 15 small-cap stocks held by these elite funds based on 16 years of research that showed their top small-cap picks are much more profitable than both their large-cap stocks and the broader market as a whole. These small-cap stocks beat the S&P 500 Total Return Index by an average of nearly one percentage point per month in our backtests, which were conducted over the period of 1999 to 2012. Moreover, since the beginning of forward testing from August 2012, the strategy worked just as our research predicted, outperforming the market every year and returning 142% over the last 32 months, which is more than 83 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).
Follow Geoffrey Raynor's Q Investments (Specter Holdings)
M/I Homes Inc (NYSE:MHO) is the second ranked long position of Raynor, who owns 728,023 shares of the single-family home builder, with a value of $17.36 million. The real estate firm improved its quarterly revenue by 12% to $263 million in the first quarter of 2015, with earnings per share of $0.31, which was lower than the prior year earnings per share of $0.41. Market experts are expecting M/I Homes Inc (NYSE:MHO) to report earnings per share of $0.40 for the current quarter. The shares of the company have improved 9.72% year-to-date. Royce & Associates and Gratia Capital are among the primary stockholders of M/I Homes Inc (NYSE:MHO) with investments worth $16.91 million and $16.90 million, respectively.
LGI Homes Inc (NASDAQ:LGIH) is another real estate equity investment of Raynor, who owns 763,149 shares with a value of $12.71 million. The shares of LGI Homes have grown 28.94% year-to-date and the firm has a market cap of $383.01 million. LGI Homes Inc (NASDAQ:LGIH) is a complete real estate provider that builds, markets, and sells new homes in all of its major markets. The firm reported 11.8% growth in the number of homes sold in May 2015, with the sale of 255 homes against the prior year number of 228 closures. It was an excellent first quarter overall for the real estate company as it reported net revenue of $120.69 million, indicating growth of 59% from the prior year quarter. Its net income grew to $7.7 million against $4.59 million of net income year-over-year. The shares of LGI Homes Inc (NASDAQ:LGIH) have received an average analyst rating of “Buy”, with a price target of $20.33, indicating a modest upside of 4.36% from its current share price. The homebuilder has attracted major investments from Gratia Capital and Osmium Partners.
In the list of top real estate stock investments of Q Investments, Forestar Group Inc. (NYSE:FOR) comes next with the investment manager holding 795,761 shares valued at $12.55 million. Forestar works in three different sectors including real estate, oil and gas, and natural resources. The company owns 113,000 acres of real estate directly or through joint ventures in 13 markets, and its oil and gas mineral interests are spread out over 960,000 acres. Forestar Group Inc. (NYSE:FOR) has struggled in the first quarter of 2015, with the firm reporting a quarterly loss of $8.2 million against net income of $8.3 million in the prior year period. According to the company, lower oil and gas prices along with lower real estate sales were responsible for its dismal performance in the first quarter. The shares of Forestar Group have declined 9.62% year-to-date and it has a market cap of $475.37 million. Cove Street Capital and Citadel Investment Group are among the major investors of Forestar Group Inc. (NYSE:FOR), with Citadel’s position including bonds worth $18.53 million.
Disclosure: None
