Hedge Funds Are Selling Eagle Materials, Inc. (EXP)

Is Eagle Materials, Inc. (NYSE:EXP) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Eagle Materials, Inc. (NYSE:EXP) has experienced a decrease in enthusiasm from smart money of late. Eagle Materials, Inc. (NYSE:EXP) was in 35 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 41. There were 37 hedge funds in our database with EXP positions at the end of the fourth quarter. Our calculations also showed that EXP isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the financial world there are a lot of indicators stock traders use to assess their holdings. A duo of the most innovative indicators are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the elite hedge fund managers can beat the broader indices by a healthy margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Christian Leone of Luxor Capital Group

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best battery 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s take a look at the fresh hedge fund action surrounding Eagle Materials, Inc. (NYSE:EXP).

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

At the end of March, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from the fourth quarter of 2020. By comparison, 34 hedge funds held shares or bullish call options in EXP a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Eagle Materials, Inc. (NYSE:EXP) was held by Citadel Investment Group, which reported holding $107.5 million worth of stock at the end of December. It was followed by Intrinsic Edge Capital with a $22.7 million position. Other investors bullish on the company included Luxor Capital Group, Millennium Management, and SG Capital Management. In terms of the portfolio weights assigned to each position Ariose Capital allocated the biggest weight to Eagle Materials, Inc. (NYSE:EXP), around 29.68% of its 13F portfolio. SG Capital Management is also relatively very bullish on the stock, setting aside 5.15 percent of its 13F equity portfolio to EXP.

Seeing as Eagle Materials, Inc. (NYSE:EXP) has witnessed bearish sentiment from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of fund managers that slashed their entire stakes in the first quarter. At the top of the heap, Michael A. Price and Amos Meron’s Empyrean Capital Partners dropped the largest position of the “upper crust” of funds monitored by Insider Monkey, comprising close to $52.9 million in stock. Will Cook’s fund, Sunriver Management, also dropped its stock, about $27.7 million worth. These moves are important to note, as total hedge fund interest dropped by 2 funds in the first quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Eagle Materials, Inc. (NYSE:EXP) but similarly valued. These stocks are Haemonetics Corporation (NYSE:HAE), NeoGenomics, Inc. (NASDAQ:NEO), Blueprint Medicines Corporation (NASDAQ:BPMC), Rexnord Corp (NYSE:RXN), Adaptive Biotechnologies Corporation (NASDAQ:ADPT), Upwork Inc. (NASDAQ:UPWK), and Just Eat Takeaway.com N.V. (NASDAQ:GRUB). This group of stocks’ market values are closest to EXP’s market value.

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As you can see these stocks had an average of 29.1 hedge funds with bullish positions and the average amount invested in these stocks was $836 million. That figure was $348 million in EXP’s case. Haemonetics Corporation (NYSE:HAE) is the most popular stock in this table. On the other hand NeoGenomics, Inc. (NASDAQ:NEO) is the least popular one with only 15 bullish hedge fund positions. Eagle Materials, Inc. (NYSE:EXP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EXP is 74.1. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 19.3% in 2021 through June 25th and beat the market again by 4.8 percentage points. Unfortunately EXP wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on EXP were disappointed as the stock returned 6.7% since the end of March (through 6/25) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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