Should You Buy Toll Brothers Inc (TOL)?

Toll Brothers Inc (NYSE:TOL) investors: listen up.

In the 21st century investor’s toolkit, there are tons of gauges investors can use to watch publicly traded companies. A couple of the most useful are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the elite money managers can outperform the broader indices by a solid margin (see just how much).

Equally as key, bullish insider trading activity is another way to look at the marketplace. There are a number of motivations for a corporate insider to cut shares of his or her company, but just one, very clear reason why they would behave bullishly. Various academic studies have demonstrated the impressive potential of this method if investors understand what to do (learn more here).

Furthermore, let’s analyze the latest info surrounding Toll Brothers Inc (NYSE:TOL).

How are hedge funds trading Toll Brothers Inc (NYSE:TOL)?

At Q2’s end, a total of 27 of the hedge funds we track were long in this stock, a change of 4% from the first quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their stakes meaningfully.

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Consequently, certain bigger names have jumped into Toll Brothers Inc (NYSE:TOL) headfirst. Point State Capital, managed by Sean Cullinan, initiated the largest position in Toll Brothers Inc (NYSE:TOL). Point State Capital had 57.1 million invested in the company at the end of the quarter. Jason Capello’s Merchants’ Gate Capital also initiated a $33.7 million position during the quarter. The other funds with brand new TOL positions are Sean Cullinan’s Point State Capital, Joe DiMenna’s ZWEIG DIMENNA PARTNERS, and Ken Griffin’s Citadel Investment Group.

What have insiders been doing with Toll Brothers Inc (NYSE:TOL)?

Insider buying made by high-level executives is most useful when the company in question has experienced transactions within the past 180 days. Over the last six-month time frame, Toll Brothers Inc (NYSE:TOL) has seen zero unique insiders buying, and 4 insider sales (see the details of insider trades here).

We’ll also take a look at the relationship between both of these indicators in other stocks similar to Toll Brothers Inc (NYSE:TOL). These stocks are The Ryland Group, Inc. (NYSE:RYL), Lennar Corporation (NYSE:LEN), PulteGroup, Inc. (NYSE:PHM), D.R. Horton, Inc. (NYSE:DHI), and NVR, Inc. (NYSE:NVR). This group of stocks are in the residential construction industry and their market caps resemble TOL’s market cap.