The worries about the election and the ongoing uncertainty about the path of interest-rate increases have been keeping investors on the sidelines. Of course, most hedge funds and other asset managers have been underperforming main stock market indices since the middle of 2015. Interestingly though, smaller-cap stocks registered their best performance relative to the large-capitalization stocks since the end of the June quarter, suggesting that this may be the best time to take a cue from their stock picks. In fact, the Russell 2000 Index gained more than 15% since the beginning of the third quarter, while the Standard and Poor’s 500 benchmark returned less than 6%. This article will lay out and discuss the hedge fund and institutional investor sentiment towards William Lyon Homes (NYSE:WLH).
William Lyon Homes (NYSE:WLH) has seen an increase in hedge fund sentiment recently. WLH was in 17 hedge funds’ portfolios at the end of September. There were 16 hedge funds in our database with WLH holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Clean Energy Fuels Corp (NASDAQ:CLNE), Francesca’s Holdings Corp (NASDAQ:FRAN), and CoLucid Pharmaceuticals Inc (NASDAQ:CLCD) to gather more data points.
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How have hedgies been trading William Lyon Homes (NYSE:WLH)?
At Q3’s end, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, up by 6% from one quarter earlier. On the other hand, there were a total of 20 hedge funds with a bullish position in WLH at the beginning of this year. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, GMT Capital, led by Thomas E. Claugus, holds the most valuable position in William Lyon Homes (NYSE:WLH). GMT Capital has a $89.7 million position in the stock, comprising 1.8% of its 13F portfolio. Sitting at the No. 2 spot is John Paulson of Paulson & Co, with a $61.6 million position. Other peers that hold long positions contain Steve Pei’s Gratia Capital, Joe Huber’s Huber Capital Management and Ken Heebner’s Capital Growth Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Consequently, key money managers were breaking ground themselves. Arbiter Partners Capital Management, led by Paul J. Isaac, assembled the most outsized position in William Lyon Homes (NYSE:WLH). Arbiter Partners Capital Management had $8.3 million invested in the company at the end of the quarter. James Dinan’s York Capital Management also initiated a $3.7 million position during the quarter. The other funds with new positions in the stock are Geoffrey Raynor’s Q Investments (Specter Holdings), Porter Collins, Daniel Moses, and Vincent Daniel’s Seawolf Capital, and Eric Halet and Davide Serra’s Algebris Investments.
Let’s now review hedge fund activity in other stocks similar to William Lyon Homes (NYSE:WLH). We will take a look at Clean Energy Fuels Corp (NASDAQ:CLNE), Francesca’s Holdings Corp (NASDAQ:FRAN), CoLucid Pharmaceuticals Inc (NASDAQ:CLCD), and Sanchez Energy Corp (NYSE:SN). All of these stocks’ market caps are closest to WLH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CLNE | 11 | 31851 | -1 |
| FRAN | 24 | 141500 | 3 |
| CLCD | 18 | 118710 | 18 |
| SN | 12 | 64128 | 0 |
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $89 million. That figure was $299 million in WLH’s case. Francesca’s Holdings Corp (NASDAQ:FRAN) is the most popular stock in this table. On the other hand Clean Energy Fuels Corp (NASDAQ:CLNE) is the least popular one with only 11 bullish hedge fund positions. William Lyon Homes (NYSE:WLH) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard FRAN might be a better candidate to consider taking a long position in.
Disclosure: None
