Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.
TRI Pointe Group Inc (NYSE:TPH) was in 25 hedge funds’ portfolios at the end of September. TPH shareholders have witnessed an increase in activity from the world’s largest hedge funds of late. There were 22 hedge funds in our database with TPH holdings at the end of the previous quarter. At the end of this article we will also compare TPH to other stocks including Capitol Federal Financial, Inc. (NASDAQ:CFFN), El Paso Electric Company (NYSE:EE), and CommVault Systems, Inc. (NASDAQ:CVLT) to get a better sense of its popularity.
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
Keeping this in mind, we’re going to go over the fresh action surrounding TRI Pointe Group Inc (NYSE:TPH).
What does the smart money think about TRI Pointe Group Inc (NYSE:TPH)?
At Q3’s end, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 14% from the second quarter of 2016. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Greenhaven Associates, managed by Edgar Wachenheim, holds the number one position in TRI Pointe Group Inc (NYSE:TPH). The fund has a $68 million position in the stock, comprising 1.3% of its 13F portfolio. Sitting at the No. 2 spot is Murray Stahl of Horizon Asset Management, with a $38.4 million position; 1.1% of its 13F portfolio is allocated to the stock. Other professional money managers with similar optimism consist of Israel Englander’s Millennium Management, David Einhorn’s Greenlight Capital and Ken Heebner’s Capital Growth Management.
Now, some big names have been driving this bullishness. Glenhill Advisors, managed by Glenn J. Krevlin, assembled the largest position in TRI Pointe Group Inc (NYSE:TPH). According to its latest 13F filing, the fund had $11.2 million invested in the company at the end of the quarter. Eduardo Abush’s Waterfront Capital Partners also made a $3.2 million investment in the stock during the quarter. The following funds were also among the new TPH investors: John A. Levin’s Levin Capital Strategies, Emanuel J. Friedman’s EJF Capital, and Ken Fisher’s Fisher Asset Management.
Let’s go over hedge fund activity in other stocks similar to TRI Pointe Group Inc (NYSE:TPH). These stocks are Capitol Federal Financial, Inc. (NASDAQ:CFFN), El Paso Electric Company (NYSE:EE), CommVault Systems, Inc. (NASDAQ:CVLT), and Ultragenyx Pharmaceutical Inc (NASDAQ:RARE). This group of stocks’ market valuations match TPH’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CFFN | 12 | 139834 | 0 |
| EE | 9 | 141784 | -3 |
| CVLT | 28 | 295284 | 4 |
| RARE | 18 | 162983 | -1 |
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $185 million. That figure was $242 million in TPH’s case. CommVault Systems, Inc. (NASDAQ:CVLT) is the most popular stock in this table. On the other hand El Paso Electric Company (NYSE:EE) is the least popular one with only 9 bullish hedge fund positions. TRI Pointe Group Inc (NYSE:TPH) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CVLT might be a better candidate to consider a long position.
Disclosure: none.
