World-class money managers like Bill Ackman and Barry Rosenstein only invest their wealthy clients’ money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It’s not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It’s also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.
M.D.C. Holdings, Inc. (NYSE:MDC) investors should pay attention to a decrease in hedge fund interest recently. At the end of this article we will also compare MDC to other stocks including Provident Financial Services, Inc. (NYSE:PFS), First Interstate Bancsystem Inc (NASDAQ:FIBK), and Columbia Pipeline Partners LP (NYSE:CPPL) to get a better sense of its popularity.
Follow M.d.c. Holdings Inc. (NYSE:MDC)
Follow M.d.c. Holdings Inc. (NYSE:MDC)
To the average investor there are dozens of indicators stock traders can use to assess publicly traded companies. A duo of the most under-the-radar indicators is composed of hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the best hedge fund managers can outclass their index-focused peers by a very impressive margin (see the details here).
With all of this in mind, let’s review the recent action regarding M.D.C. Holdings, Inc. (NYSE:MDC).
What does the smart money think about M.D.C. Holdings, Inc. (NYSE:MDC)?
At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -27% from one quarter earlier. With hedge funds’ sentiment swirling, there exist a few noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Royce & Associates, managed by Chuck Royce, holds the largest position in M.D.C. Holdings, Inc. (NYSE:MDC). Royce & Associates has an $17.7 million position in the stock, comprising 0.1% of its 13F portfolio. On Royce & Associates’s heels is Millennium Management, led by Israel Englander, holding an $14.2 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other professional money managers that are bullish encompass Greg Poole’s Echo Street Capital Management, John Thiessen’s Vertex One Asset Management and Steve Leonard’s Pacifica Capital Investments.
Due to the fact that M.D.C. Holdings, Inc. (NYSE:MDC) has faced declining sentiment from hedge fund managers, it’s easy to see that there is a sect of fund managers that elected to cut their positions entirely heading into Q4. At the top of the heap, Neil Chriss’s Hutchin Hill Capital sold off the largest position of the 700 funds watched by Insider Monkey, comprising an estimated $3.3 million in stock, and Alec Litowitz and Ross Laser’s Magnetar Capital was right behind this move, as the fund sold off about $0.5 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 4 funds heading into Q4.
Let’s go over 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 Provident Financial Services, Inc. (NYSE:PFS), First Interstate Bancsystem Inc (NASDAQ:FIBK), Columbia Pipeline Partners LP (NYSE:CPPL), and MasTec, Inc. (NYSE:MTZ). This group of stocks’ market caps resemble MDC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PFS | 10 | 22776 | 4 |
| FIBK | 11 | 48337 | 1 |
| CPPL | 4 | 8181 | 0 |
| MTZ | 22 | 228379 | 0 |
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $77 million. That figure was $67 million in MDC’s case. MasTec, Inc. (NYSE:MTZ) is the most popular stock in this table. On the other hand Columbia Pipeline Partners LP (NYSE:CPPL) is the least popular one with only 4 bullish hedge fund positions. M.D.C. Holdings, Inc. (NYSE:MDC) is not the least popular stock in this group, but still has not attracted much attention from investors. This is a slightly negative signal, and we’d rather spend our time researching stocks that that hedge funds are collectively most bullish on. In this case,, MTZ might be a better candidate to consider a long position.
