Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in Q4 due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average over the long-term. The top 20 stocks among hedge funds beat the S&P 500 Index ETF by more than 6 percentage points so far this year. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at M.D.C. Holdings, Inc. (NYSE:MDC) from the perspective of those elite funds.
Is M.D.C. Holdings, Inc. (NYSE:MDC) a good investment today? Money managers are getting more optimistic. The number of long hedge fund positions improved by 1 in recent months. Our calculations also showed that mdc isn’t among the 30 most popular stocks among hedge funds. MDC was in 17 hedge funds’ portfolios at the end of the first quarter of 2019. There were 16 hedge funds in our database with MDC holdings at the end of the previous quarter.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Steve Leonard of Pacifica Capital
Let’s analyze the latest hedge fund action surrounding M.D.C. Holdings, Inc. (NYSE:MDC).
How are hedge funds trading M.D.C. Holdings, Inc. (NYSE:MDC)?
Heading into the second quarter of 2019, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the fourth quarter of 2018. By comparison, 16 hedge funds held shares or bullish call options in MDC a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in M.D.C. Holdings, Inc. (NYSE:MDC) was held by Polar Capital, which reported holding $19.2 million worth of stock at the end of March. It was followed by Royce & Associates with a $14.8 million position. Other investors bullish on the company included Millennium Management, Balyasny Asset Management, and Pacifica Capital Investments.
Consequently, specific money managers have jumped into M.D.C. Holdings, Inc. (NYSE:MDC) headfirst. GLG Partners, managed by Noam Gottesman, initiated the biggest position in M.D.C. Holdings, Inc. (NYSE:MDC). GLG Partners had $4.7 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $2.5 million investment in the stock during the quarter. The other funds with brand new MDC positions are Matthew Hulsizer’s PEAK6 Capital Management and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as M.D.C. Holdings, Inc. (NYSE:MDC) but similarly valued. We will take a look at JELD-WEN Holding, Inc. (NYSE:JELD), Solaredge Technologies Inc (NASDAQ:SEDG), Crescent Point Energy Corp (NYSE:CPG), and MaxLinear, Inc. (NYSE:MXL). All of these stocks’ market caps resemble MDC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| JELD | 21 | 327610 | 5 |
| SEDG | 22 | 115277 | 8 |
| CPG | 17 | 72343 | 1 |
| MXL | 6 | 33874 | 1 |
| Average | 16.5 | 137276 | 3.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $137 million. That figure was $103 million in MDC’s case. Solaredge Technologies Inc (NASDAQ:SEDG) is the most popular stock in this table. On the other hand MaxLinear, Inc. (NYSE:MXL) is the least popular one with only 6 bullish hedge fund positions. M.D.C. Holdings, Inc. (NYSE:MDC) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Hedge funds were also right about betting on MDC as the stock returned 14.6% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
