Hedge Funds Are Buying D.R. Horton, Inc. (DHI)

As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about D.R. Horton, Inc. (NYSE:DHI).

Is D.R. Horton, Inc. (NYSE:DHI) a good investment now? The smart money was betting on the stock. The number of long hedge fund bets moved up by 6 recently. D.R. Horton, Inc. (NYSE:DHI) was in 51 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 66. Our calculations also showed that DHI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

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. Keeping this in mind let’s review the latest hedge fund action regarding D.R. Horton, Inc. (NYSE:DHI).

George Soros of Soros Fund Management

Do Hedge Funds Think DHI Is A Good Stock To Buy Now?

At third quarter’s end, a total of 51 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from the previous quarter. On the other hand, there were a total of 62 hedge funds with a bullish position in DHI a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).

The largest stake in D.R. Horton, Inc. (NYSE:DHI) was held by Egerton Capital Limited, which reported holding $722.1 million worth of stock at the end of September. It was followed by Soros Fund Management with a $363 million position. Other investors bullish on the company included Echo Street Capital Management, Holocene Advisors, and Millennium Management. In terms of the portfolio weights assigned to each position Soros Fund Management allocated the biggest weight to D.R. Horton, Inc. (NYSE:DHI), around 6.7% of its 13F portfolio. Covalent Capital Partners is also relatively very bullish on the stock, dishing out 5.72 percent of its 13F equity portfolio to DHI.

With a general bullishness amongst the heavyweights, specific money managers have jumped into D.R. Horton, Inc. (NYSE:DHI) headfirst. Anomaly Capital Management, managed by Ben Jacobs, assembled the biggest position in D.R. Horton, Inc. (NYSE:DHI). Anomaly Capital Management had $73.5 million invested in the company at the end of the quarter. Renaissance Technologies also made a $44.5 million investment in the stock during the quarter. The other funds with new positions in the stock are John Khoury’s Long Pond Capital, Mark Coe’s Intrinsic Edge Capital, and Paul Tudor Jones’s Tudor Investment Corp.

Let’s go over hedge fund activity in other stocks similar to D.R. Horton, Inc. (NYSE:DHI). We will take a look at The Kroger Co. (NYSE:KR), Ameriprise Financial, Inc. (NYSE:AMP), Willis Towers Watson Public Limited Company (NASDAQ:WLTW), Garmin Ltd. (NYSE:GRMN), TELUS Corporation (NYSE:TU), Paycom Software Inc (NYSE:PAYC), and ANSYS, Inc. (NASDAQ:ANSS). This group of stocks’ market caps are closest to DHI’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 39.1 hedge funds with bullish positions and the average amount invested in these stocks was $1973 million. That figure was $2185 million in DHI’s case. Willis Towers Watson Public Limited Company (NASDAQ:WLTW) is the most popular stock in this table. On the other hand TELUS Corporation (NYSE:TU) is the least popular one with only 12 bullish hedge fund positions. D.R. Horton, Inc. (NYSE:DHI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DHI is 64.1. 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 gained 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on DHI as the stock returned 16.4% since the end of Q3 (through 11/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.