Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about KB Home (NYSE:KBH) in this article.
Is KBH stock a buy? KB Home (NYSE:KBH) has experienced an increase in hedge fund interest of late. KB Home (NYSE:KBH) was in 28 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 29. There were 23 hedge funds in our database with KBH positions at the end of the third quarter. Our calculations also showed that KBH isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Noam Gottesman of GLG Partners
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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. Now let’s go over the new hedge fund action surrounding KB Home (NYSE:KBH).
Do Hedge Funds Think KBH Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in KBH over the last 22 quarters. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
The largest stake in KB Home (NYSE:KBH) was held by Fisher Asset Management, which reported holding $92.3 million worth of stock at the end of December. It was followed by Millennium Management with a $58.1 million position. Other investors bullish on the company included GLG Partners, Balyasny Asset Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Verdad Advisers allocated the biggest weight to KB Home (NYSE:KBH), around 2.53% of its 13F portfolio. Basswood Capital is also relatively very bullish on the stock, dishing out 1.03 percent of its 13F equity portfolio to KBH.
With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Carlson Capital, managed by Clint Carlson, established the biggest position in KB Home (NYSE:KBH). Carlson Capital had $12.6 million invested in the company at the end of the quarter. Robert Bishop’s Impala Asset Management also made a $11.4 million investment in the stock during the quarter. The other funds with brand new KBH positions are Dan Rasmussen’s Verdad Advisers, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Karim Abbadi and Edward McBride’s Centiva Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as KB Home (NYSE:KBH) but similarly valued. These stocks are Canada Goose Holdings Inc. (NYSE:GOOS), Macquarie Infrastructure Corporation (NYSE:MIC), Copa Holdings, S.A. (NYSE:CPA), Adient plc (NYSE:ADNT), LCI Industries (NYSE:LCII), HMS Holdings Corp. (NASDAQ:HMSY), and Arconic Corporation (NYSE:ARNC). This group of stocks’ market values match KBH’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GOOS | 19 | 193917 | -2 |
| MIC | 31 | 772981 | 0 |
| CPA | 21 | 267324 | -3 |
| ADNT | 37 | 650911 | -2 |
| LCII | 16 | 124857 | -9 |
| HMSY | 26 | 239529 | 0 |
| ARNC | 24 | 904373 | 3 |
| Average | 24.9 | 450556 | -1.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.9 hedge funds with bullish positions and the average amount invested in these stocks was $451 million. That figure was $316 million in KBH’s case. Adient plc (NYSE:ADNT) is the most popular stock in this table. On the other hand LCI Industries (NYSE:LCII) is the least popular one with only 16 bullish hedge fund positions. KB Home (NYSE:KBH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for KBH is 67.5. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Hedge funds were also right about betting on KBH as the stock returned 47.1% since the end of Q4 (through 4/19) 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.
