Oakmark Funds on PulteGroup (PHM): “We Still Find the Stock Attractive”

Oakmark Funds, an investment management firm, published its “Oakmark Fund” first quarter 2022 investor letter – a copy of which can be seen here.  A return of -3% was reported by the fund for the first quarter of 2022, outperforming its benchmark, the S&P 500 Index which had a -5% return for the same period. Try to spend some time taking a look at the fund’s top 5 holdings to be informed about their best picks for 2022.

In its Q1 2022 investor letter, Oakmark Fund mentioned PulteGroup, Inc. (NYSE:PHM) and explained its insights for the company. Founded in 1956, PulteGroup, Inc. (NYSE:PHM)  is an Atlanta, Georgia-based home construction company with a $10.45 billion market capitalization. PulteGroup, Inc. (NYSE:PHM)  delivered a -24.23% return since the beginning of the year, while its 12-month returns are down by -19.66%. The stock closed at $43.31 per share on April 21, 2022.

Here is what Oakmark Fund has to say about PulteGroup, Inc. (NYSE:PHM) in its Q1 2022 investor letter:

“Pulte (NYSE:PHM) is one of the nation’s largest homebuilders. While demographic tailwinds are expected to support healthy housing demand for years to come, more important to our thesis is the company’s operational transformation over the past decade. Having adopted a more rigorous, returns-driven approach to land acquisition and manufacturing, Pulte now consistently earns returns on equity near the high end of its peer group. We expect the company to generate approximately 15% of its market cap in free cash flow this year, and management is putting that cash to good use by strengthening its balance sheet and returning capital to shareholders. While we recognize that the recent surge in home prices is producing a level of profitability that’s above what we would consider “normal,” we still find the stock attractive relative to our more tempered estimate of mid-cycle earnings.”

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Our calculations show that PulteGroup, Inc. (NYSE:PHM) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. PulteGroup, Inc. (NYSE:PHM) was in 35 hedge fund portfolios at the end of the fourth quarter of 2021. PulteGroup, Inc. (NYSE:PHM) delivered a -15.92% return in the past 3 months.

In February 2022, we also shared another hedge fund’s views on PulteGroup, Inc. (NYSE:PHM) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.

Disclosure: None. This article is originally published at Insider Monkey.