Beazer Homes USA, Inc. (NYSE:BZH) was in 17 hedge funds’ portfolio at the end of March. BZH shareholders have witnessed a decrease in hedge fund sentiment recently. There were 17 hedge funds in our database with BZH holdings at the end of the previous quarter.
If you’d ask most market participants, hedge funds are viewed as worthless, old investment tools of years past. While there are over 8000 funds trading at the moment, we look at the elite of this club, about 450 funds. It is widely believed that this group controls most of all hedge funds’ total capital, and by watching their highest performing picks, we have deciphered a few investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).
Equally as beneficial, bullish insider trading activity is a second way to parse down the financial markets. As the old adage goes: there are a number of incentives for a bullish insider to cut shares of his or her company, but just one, very simple reason why they would behave bullishly. Plenty of academic studies have demonstrated the useful potential of this tactic if piggybackers know where to look (learn more here).
With these “truths” under our belt, we’re going to take a look at the recent action regarding Beazer Homes USA, Inc. (NYSE:BZH).
What have hedge funds been doing with Beazer Homes USA, Inc. (NYSE:BZH)?
At the end of the first quarter, a total of 17 of the hedge funds we track held long positions in this stock, a change of 0% from one quarter earlier. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes meaningfully.
Of the funds we track, Highbridge Capital Management, managed by Glenn Russell Dubin, holds the most valuable position in Beazer Homes USA, Inc. (NYSE:BZH). Highbridge Capital Management has a $25.3 million position in the stock, comprising 0.3% of its 13F portfolio. On Highbridge Capital Management’s heels is Appaloosa Management LP, managed by David Tepper, which held a $20.2 million position; 0.4% of its 13F portfolio is allocated to the stock. Some other hedge funds with similar optimism include Don Morgan’s Brigade Capital, Ken Griffin’s Citadel Investment Group and Israel Englander’s Millennium Management.
Since Beazer Homes USA, Inc. (NYSE:BZH) has witnessed falling interest from hedge fund managers, it’s safe to say that there is a sect of hedgies who sold off their entire stakes heading into Q2. Intriguingly, Randall Smith’s Alden Global Capital said goodbye to the largest stake of the “upper crust” of funds we watch, totaling close to $20.6 million in stock., and Donald Chiboucis of Columbus Circle Investors was right behind this move, as the fund cut about $17 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
What do corporate executives and insiders think about Beazer Homes USA, Inc. (NYSE:BZH)?
Insider trading activity, especially when it’s bullish, is at its handiest when the company in focus has experienced transactions within the past six months. Over the last half-year time frame, Beazer Homes USA, Inc. (NYSE:BZH) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to Beazer Homes USA, Inc. (NYSE:BZH). These stocks are AV Homes Inc (NASDAQ:AVHI), Gafisa SA (ADR) (NYSE:GFA), Hovnanian Enterprises, Inc. (NYSE:HOV), M/I Homes Inc (NYSE:MHO), and Xinyuan Real Estate Co., Ltd. (ADR) (NYSE:XIN). This group of stocks are the members of the residential construction industry and their market caps match BZH’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| AV Homes Inc (NASDAQ:AVHI) | 6 | 0 | 1 |
| Gafisa SA (ADR) (NYSE:GFA) | 7 | 0 | 0 |
| Hovnanian Enterprises, Inc. (NYSE:HOV) | 20 | 0 | 2 |
| M/I Homes Inc (NYSE:MHO) | 14 | 1 | 4 |
| Xinyuan Real Estate Co., Ltd. (ADR) (NYSE:XIN) | 5 | 0 | 0 |
With the results exhibited by our studies, everyday investors must always keep an eye on hedge fund and insider trading activity, and Beazer Homes USA, Inc. (NYSE:BZH) shareholders fit into this picture quite nicely.
