Here is What Hedge Funds Think About Taylor Morrison Home Corp (TMHC)

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on September 30th. We at Insider Monkey have made an extensive database of more than 867 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Taylor Morrison Home Corp (NYSE:TMHC) based on those filings.

Taylor Morrison Home Corp (NYSE:TMHC) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 23 hedge funds’ portfolios at the end of the third quarter of 2021. Our calculations also showed that TMHC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). At the end of this article we will also compare TMHC to other stocks including Dana Incorporated (NYSE:DAN), Cathay General Bancorp (NASDAQ:CATY), and EverCommerce Inc. (NASDAQ:EVCM) to get a better sense of its popularity.

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. Now we’re going to take a look at the new hedge fund action surrounding Taylor Morrison Home Corp (NYSE:TMHC).

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

At the end of the third quarter, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards TMHC over the last 25 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Bill Miller’s Miller Value Partners has the most valuable position in Taylor Morrison Home Corp (NYSE:TMHC), worth close to $70.9 million, comprising 1.6% of its total 13F portfolio. The second most bullish fund manager is Basswood Capital, managed by Matthew Lindenbaum, which holds a $43.9 million position; 1.8% of its 13F portfolio is allocated to the stock. Remaining peers that hold long positions include Cliff Asness’s AQR Capital Management, Anthony Bozza’s Lakewood Capital Management and Brian Ashford-Russell and Tim Woolley’s Polar Capital. In terms of the portfolio weights assigned to each position Basswood Capital allocated the biggest weight to Taylor Morrison Home Corp (NYSE:TMHC), around 1.78% of its 13F portfolio. Miller Value Partners is also relatively very bullish on the stock, dishing out 1.64 percent of its 13F equity portfolio to TMHC.

Judging by the fact that Taylor Morrison Home Corp (NYSE:TMHC) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there is a sect of hedge funds that decided to sell off their entire stakes by the end of the third quarter. At the top of the heap, Greg Poole’s Echo Street Capital Management said goodbye to the largest investment of the 750 funds monitored by Insider Monkey, worth about $0.7 million in stock. Donald Sussman’s fund, Paloma Partners, also dumped its stock, about $0.6 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now review hedge fund activity in other stocks similar to Taylor Morrison Home Corp (NYSE:TMHC). These stocks are Dana Incorporated (NYSE:DAN), Cathay General Bancorp (NASDAQ:CATY), EverCommerce Inc. (NASDAQ:EVCM), JFrog Ltd. (NASDAQ:FROG), Prothena Corporation plc (NASDAQ:PRTA), LiveRamp Holdings, Inc. (NYSE:RAMP), and Simmons First National Corporation (NASDAQ:SFNC). This group of stocks’ market caps match TMHC’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.9 hedge funds with bullish positions and the average amount invested in these stocks was $526 million. That figure was $233 million in TMHC’s case. Prothena Corporation plc (NASDAQ:PRTA) is the most popular stock in this table. On the other hand Simmons First National Corporation (NASDAQ:SFNC) is the least popular one with only 11 bullish hedge fund positions. Taylor Morrison Home Corp (NYSE:TMHC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TMHC is 67.6. 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 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. Hedge funds were also right about betting on TMHC as the stock returned 31.8% since the end of Q3 (through 12/9) 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.

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