Moon Capital Management, an investment management company, released its fourth-quarter 2022 investor letter. A copy of the same can be downloaded here. For the year 2022, the S&P 500 declined almost 20%, which was the largest annual decline since the 2008 Great Recession. The fund declined by approximately 7% for the same period. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.
Moon Capital highlighted stocks like Green Brick Partners, Inc. (NYSE:GRBK) in the Q4 2022 investor letter. Headquartered in Plano, Texas, Green Brick Partners, Inc. (NYSE:GRBK) is a homebuilding and land development operator. On January 16, 2023, Green Brick Partners, Inc. (NYSE:GRBK) stock closed at $27.70 per share. One-month return of Green Brick Partners, Inc. (NYSE:GRBK) was 12.56%, and its shares gained 7.70% of their value over the last 52 weeks. Green Brick Partners, Inc. (NYSE:GRBK) has a market capitalization of $1.275 billion.
Moon Capital made the following comment about Green Brick Partners, Inc. (NYSE:GRBK) in its Q4 2022 investor letter:
“For portfolio management reasons, we sold our stake in LGI Homes during the fourth quarter (at a loss.) We continue to hold our shares in another homebuilder, Green Brick Partners, Inc. (NYSE:GRBK), a position in which we currently have an unrealized gain.
The recent signs of what may be the early stages of a housing market downturn have many investors calling for a major housing correction on the order of that experienced in 2007. While there may be certain similarities to the last housing crisis as it relates to affordability, there are also some very major differences.
In 2007, the housing market had experienced years of construction in excess of both historical averages and new household formation – the exact opposite of conditions today. There are a host of other differences, as well. Consumers have much better balance sheets today than they did in 2006, with homeowner equity currently at an all-time high. Unlike the last housing bubble, delinquencies remain near all-time lows, so the forced credit sales that compounded the problem in the last bubble should be far less of an issue. Another material difference is the adjustable-rate mortgage (ARM). Towards the end of the last housing boom, ARMs accounted for well above 30% of all mortgages. This created a ticking time bomb as rate increases flowed into higher payments. Today ARMs account for less than 10% of the U.S. mortgage market.
Putting it all together, we think builders are in a much better position to ride out the near-term weakness in the housing market than they were during the previous cycle. At today’s prices, we continue to see opportunity in the homebuilding sector, despite the significant near-term headwinds. We also believe that the current housing correction is likely to be more regional in nature and that Green Brick, which operates largely in business-friendly, pro-growth markets, will significantly outperform its peers.”
Green Brick Partners, Inc. (NYSE:GRBK) is not on our 30 Most Popular Stocks Among Hedge Funds list. As per our database, 18 hedge fund portfolios held Green Brick Partners, Inc. (NYSE:GRBK) at the end of the third quarter, which was 15 in the previous quarter.
We discussed Green Brick Partners, Inc. (NYSE:GRBK) in another article and shared Greenlight Capital’s views on the company. In addition, please check out our hedge fund investor letters Q4 2022 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
