The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Forestar Group Inc. (NYSE:FOR).
Is FOR a good stock to buy now? Forestar Group Inc. (NYSE:FOR) investors should be aware of a decrease in hedge fund interest lately. Forestar Group Inc. (NYSE:FOR) was in 11 hedge funds’ portfolios at the end of September. The all time high for this statistics is 16. There were 14 hedge funds in our database with FOR holdings at the end of June. Our calculations also showed that FOR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
According to most stock holders, hedge funds are perceived as underperforming, old investment vehicles of years past. While there are greater than 8000 funds in operation today, Our researchers choose to focus on the moguls of this club, around 850 funds. Most estimates calculate that this group of people control the majority of all hedge funds’ total capital, and by monitoring their inimitable investments, Insider Monkey has brought to light many investment strategies that have historically outstripped the broader indices. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
Clint Carlson of Carlson Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. With all of this in mind we’re going to review the fresh hedge fund action surrounding Forestar Group Inc. (NYSE:FOR).
Do Hedge Funds Think FOR Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -21% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards FOR over the last 21 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Long Pond Capital, managed by John Khoury, holds the largest position in Forestar Group Inc. (NYSE:FOR). Long Pond Capital has a $82.9 million position in the stock, comprising 3.2% of its 13F portfolio. On Long Pond Capital’s heels is Carlson Capital, led by Clint Carlson, holding a $9.7 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish encompass Jonathan Soros’s JS Capital, Ken Grossman and Glen Schneider’s SG Capital Management and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Long Pond Capital allocated the biggest weight to Forestar Group Inc. (NYSE:FOR), around 3.18% of its 13F portfolio. SG Capital Management is also relatively very bullish on the stock, designating 0.52 percent of its 13F equity portfolio to FOR.
Because Forestar Group Inc. (NYSE:FOR) has faced a decline in interest from hedge fund managers, it’s safe to say that there were a few fund managers who were dropping their full holdings in the third quarter. Intriguingly, Joseph Samuels’s Islet Management cut the biggest stake of all the hedgies monitored by Insider Monkey, totaling about $0.6 million in stock. Michael Gelband’s fund, ExodusPoint Capital, also sold off its stock, about $0.4 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 3 funds in the third quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Forestar Group Inc. (NYSE:FOR). These stocks are Arcos Dorados Holding Inc (NYSE:ARCO), NextGen Healthcare, Inc. (NASDAQ:NXGN), Tompkins Financial Corporation (NYSE:TMP), Kaiser Aluminum Corp. (NASDAQ:KALU), Krystal Biotech, Inc. (NASDAQ:KRYS), Lantheus Holdings Inc (NASDAQ:LNTH), and Perdoceo Education Corporation (NASDAQ:PRDO). This group of stocks’ market valuations match FOR’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ARCO | 12 | 39048 | -3 |
| NXGN | 16 | 28532 | -1 |
| TMP | 7 | 9977 | 3 |
| KALU | 16 | 55745 | 0 |
| KRYS | 10 | 196697 | -3 |
| LNTH | 16 | 150006 | -4 |
| PRDO | 17 | 129425 | -2 |
| Average | 13.4 | 87061 | -1.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.4 hedge funds with bullish positions and the average amount invested in these stocks was $87 million. That figure was $102 million in FOR’s case. Perdoceo Education Corporation (NASDAQ:PRDO) is the most popular stock in this table. On the other hand Tompkins Financial Corporation (NYSE:TMP) is the least popular one with only 7 bullish hedge fund positions. Forestar Group Inc. (NYSE:FOR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for FOR is 42.6. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on FOR as the stock returned 11.6% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
