Hedge Funds Have Built A Place in Their Portfolios for These Homebuilders

#3 Toll Brothers Inc (NYSE:TOL)

 – Investors with long positions (as of March 31): 34

 – Aggregate value of investors’ holdings (as of March 31): $446.75 million

Moving on, several hedge funds used the 11.38% decline in Toll Brothers Inc (NYSE:TOL)’s stock during the first quarter to initiate a stake in the company. Edgar Wachenheim‘s Greenhaven Associates was one of the hedge funds initiating a stake in Toll Brothers Inc (NYSE:TOL) during the quarter, purchasing 1.66 million shares of the company. However, while the number of shareholders of the company in our system increased by four during the quarter, the aggregate value of their holdings fell by $52.3 million. On May 24, the Toll Brothers reported its fiscal year 2016 second quarter numbers, which were much better than what analysts had projected. While the Street was expecting Toll Brothers to report EPS of $0.46 on revenue of $1.04 billion, the company announced EPS of $0.51 on revenue of $1.12 billion. Following the earnings release, analysts at Deutsche Bank reiterated their ‘Buy’ rating and $41 price target on the stock on May 25.

#2 D.R. Horton, Inc. (NYSE:DHI)

 – Investors with long positions (as of March 31): 38

 – Aggregate value of investors’ holdings (as of March 31): $1.09 billion

The largest homebuilding company in the country suffered a drop in its popularity among hedge funds during the first quarter. During that time, the number of hedge funds with long positions in D.R. Horton, Inc. (NYSE:DHI) declined by four, while the aggregate value of their D.R. Horton holdings shrank by $218 million. Nevertheless, there were also a few hedge funds that increased their stake in the company significantly during the first quarter, including Cliff Asness‘ AQR Capital Management, which boosted its stake by 114% to 6.45 million shares. Shares of D.R. Horton, Inc. (NYSE:DHI) have rebounded from a terrible start to the year, making up most of those losses over the past four months. Citing the company’s strong financials and the positive outlook for housing prices, most analysts are currently bullish on the stock, including analysts at RBC Capital, who reiterated their ‘Outperform’ rating on the stock on April 25, while increasing their price target on it to $36 from $35.

#1 Lennar Corporation (NYSE:LEN)

 – Investors with long positions (as of March 31): 43

 – Aggregate value of investors’ holdings (as of March 31): $1.18 billion

Though the number of shareholders of Lennar Corporation (NYSE:LEN) among the funds that we track inched down by one during the first quarter, the aggregate value of their holdings in it increased by 13.24%. Lennar Corporation (NYSE:LEN)’s stock ended the first quarter on a flat note, but has been drifting lower in the second quarter and currently trades down by over 7% year-to-date. According to analysts, the stock can perform well going forward if the company manages its debt burden well. The stock currently sports an average rating of ‘Overweight’ and an average price target of $54.60 from the 18 prominent analysts and research firms who cover it. Ross Margolies’ Stelliam Investment Management upped its stake in Lennar Corporation (NYSE:LEN) by 16% to 2.04 million shares during the first quarter.

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