Argosy Investors recently released its Q1 2021 Investor Letter, a copy of which you can read here. First-quarter 2021 performance was 8.2% in select accounts. The S&P 500 by comparison returned 7.0%. You should check out Argosy Investors’ top 5 stock picks for investors to buy right now, which could be the biggest winners of 2021.
In the Q1 2021 Investor Letter, the fund highlighted a few stocks and Dream Finders Homes Inc. (NASDAQ:DFH) is one of them. Dream Finders Homes Inc. (NASDAQ:DFH) is one of the nation’s premier home builders with a diverse set of options to fit every stage of life. In the last one month, Dream Finders Homes Inc. (NASDAQ:DFH) stock gained 2.8% and on April 15th it had a closing price of $23.16. Here is what the fund said:
“In the few years I have been writing about my investment decisions, and at one point I discussed NVR and why it represented a model for homebuilding that I would invest in. Little did I know that Dream Finders Homes (DFH) would come public just a few short years later. Dream Finders is a smaller, faster-growing version of NVR and they are exhibiting a similar trajectory in profitability and returns on capital that NVR did at this point in their journey. They have some opportunities to improve profitability as they scale, so I hope to hang on to this one for a while. DFH currently trades for about 14x 2021 earnings, which is a good valuation at which to own the shares.
If we’re lucky, DFH will grow revenues at 15% per year for at least the next 5 years and perhaps longer. Profits could grow at 19% annually if margins expand to levels consistent with NVR. On top of that, DFH can generate $1.25 billion in profits over the next 5 years, and if they use those profits to repurchase $1 billion in shares, they can repurchase 20 million shares, or ~20% of shares outstanding. If all of this came to pass, DFH earnings per share can grow by 25% annually. This is undoubtedly the glass-half-full view of DFH’s prospects, but my analysis of less sanguine results leaves me feeling that DFH can create wealth on our behalf under a wide variety of scenarios.”
Pixabay/Public Domain
Our calculations showed that Dream Finders Homes Inc. (NASDAQ:DFH) isn’t ranked among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
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 innovative stocks to buy 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. 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:
Disclosure: None. This article is originally published at Insider Monkey.