If you’d ask most investors, hedge funds are viewed as unimportant, outdated investment tools of the past. While there are more than 8000 funds with their doors open today, we hone in on the elite of this group, close to 450 funds. Most estimates calculate that this group oversees the lion’s share of all hedge funds’ total capital, and by paying attention to their highest performing stock picks, we have figured out a few investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).
Equally as key, bullish insider trading activity is a second way to break down the financial markets. As the old adage goes: there are a number of motivations for a corporate insider to downsize shares of his or her company, but only one, very simple reason why they would initiate a purchase. Many academic studies have demonstrated the impressive potential of this tactic if investors know what to do (learn more here).
With these “truths” under our belt, let’s take a gander at the key action regarding Lennar Corporation (NYSE:LEN).
How have hedgies been trading Lennar Corporation (NYSE:LEN)?
At the end of the first quarter, a total of 48 of the hedge funds we track were long in this stock, a change of -2% from the first quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their holdings significantly.
When looking at the hedgies we track, Ken Heebner’s Capital Growth Management had the largest position in Lennar Corporation (NYSE:LEN), worth close to $201.2 million, comprising 5% of its total 13F portfolio. Coming in second is Stanley Druckenmiller of Duquesne Capital, with a $115.9 million position; the fund has 8% of its 13F portfolio invested in the stock. Some other hedgies with similar optimism include Jeffrey Vinik’s Vinik Asset Management, Steven Cohen’s SAC Capital Advisors and Wayne Cooperman’s Cobalt Capital Management.
Judging by the fact that Lennar Corporation (NYSE:LEN) has experienced a declination in interest from the aggregate hedge fund industry, it’s easy to see that there were a few hedge funds that elected to cut their full holdings in Q1. Intriguingly, Douglas Dillard Jr. and Raj D. Venkatesan’s Standard Pacific Capital sold off the biggest position of all the hedgies we track, valued at an estimated $40.1 million in stock.. Joe DiMenna’s fund, ZWEIG DIMENNA PARTNERS, also said goodbye to its stock, about $24.5 million worth. These transactions are important to note, as total hedge fund interest fell by 1 funds in Q1.
How are insiders trading Lennar Corporation (NYSE:LEN)?
Bullish insider trading is best served when the company in focus has experienced transactions within the past half-year. Over the last six-month time period, Lennar Corporation (NYSE:LEN) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to Lennar Corporation (NYSE:LEN). These stocks are The Ryland Group, Inc. (NYSE:RYL), NVR, Inc. (NYSE:NVR), Toll Brothers Inc (NYSE:TOL), D.R. Horton, Inc. (NYSE:DHI), and PulteGroup, Inc. (NYSE:PHM). This group of stocks belong to the residential construction industry and their market caps match LEN’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| The Ryland Group, Inc. (NYSE:RYL) | 16 | 0 | 0 |
| NVR, Inc. (NYSE:NVR) | 20 | 1 | 5 |
| Toll Brothers Inc (NYSE:TOL) | 26 | 0 | 6 |
| D.R. Horton, Inc. (NYSE:DHI) | 29 | 0 | 3 |
| PulteGroup, Inc. (NYSE:PHM) | 29 | 0 | 9 |
With the returns demonstrated by Insider Monkey’s studies, retail investors should always watch hedge fund and insider trading activity, and Lennar Corporation (NYSE:LEN) is no exception.
