Is Tri Pointe Group Inc (NYSE:TPH) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is Tri Pointe Group Inc (NYSE:TPH) an excellent stock to buy now? Investors who are in the know are selling at the margin but the overall hedge fund sentiment towards the stock is still very positive. The number of long hedge fund bets were cut by 1 in recent months. Our calculations also showed that TPH isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
According to most shareholders, hedge funds are seen as slow, old financial vehicles of yesteryear. While there are more than 8000 funds with their doors open at the moment, Our experts hone in on the crème de la crème of this group, about 750 funds. Most estimates calculate that this group of people orchestrate bulk of the smart money’s total asset base, and by following their inimitable picks, Insider Monkey has discovered a few investment strategies that have historically outperformed the broader indices. Insider Monkey’s flagship hedge fund strategy surpassed the S&P 500 index by around 5 percentage points per annum since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a look at the key hedge fund action encompassing Tri Pointe Group Inc (NYSE:TPH).
Hedge fund activity in Tri Pointe Group Inc (NYSE:TPH)
At the end of the second quarter, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards TPH over the last 16 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Greenhaven Associates held the most valuable stake in Tri Pointe Group Inc (NYSE:TPH), which was worth $57.4 million at the end of the second quarter. On the second spot was Echo Street Capital Management which amassed $40.9 million worth of shares. Moreover, Citadel Investment Group, Fisher Asset Management, and AQR Capital Management were also bullish on Tri Pointe Group Inc (NYSE:TPH), allocating a large percentage of their portfolios to this stock.
Seeing as Tri Pointe Group Inc (NYSE:TPH) has faced declining sentiment from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of funds that decided to sell off their entire stakes last quarter. It’s worth mentioning that Renaissance Technologies dumped the largest position of the 750 funds monitored by Insider Monkey, comprising close to $9.6 million in stock, and Steve Cohen’s Point72 Asset Management was right behind this move, as the fund cut about $1.9 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 1 funds last quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Tri Pointe Group Inc (NYSE:TPH) but similarly valued. These stocks are Chesapeake Lodging Trust (NYSE:CHSP), Hope Bancorp, Inc. (NASDAQ:HOPE), Installed Building Products Inc (NYSE:IBP), and Supernus Pharmaceuticals Inc (NASDAQ:SUPN). This group of stocks’ market valuations resemble TPH’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CHSP | 11 | 34294 | -1 |
| HOPE | 15 | 65791 | 1 |
| IBP | 13 | 213470 | 0 |
| SUPN | 16 | 93537 | -6 |
| Average | 13.75 | 101773 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $102 million. That figure was $176 million in TPH’s case. Supernus Pharmaceuticals Inc (NASDAQ:SUPN) is the most popular stock in this table. On the other hand Chesapeake Lodging Trust (NYSE:CHSP) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Tri Pointe Group Inc (NYSE:TPH) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on TPH as the stock returned 25.6% during Q3 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.
