Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 823 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Taylor Morrison Home Corp (NYSE:TMHC) in this article.
Taylor Morrison Home Corp (NYSE:TMHC) has seen an increase in support from the world’s most elite money managers in recent months. Taylor Morrison Home Corp (NYSE:TMHC) was in 33 hedge funds’ portfolios at the end of June. The all time high for this statistics is 28. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 28 hedge funds in our database with TMHC positions at the end of the first quarter. Our calculations also showed that TMHC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are many formulas stock traders put to use to analyze their holdings. Two of the most innovative formulas are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the elite money managers can outperform the broader indices by a solid margin (see the details here).
Ken Heebner of Capital Growth Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. Last week, most investors overlooked a major development because of the presidential elections: Oregon became the first state to legalize psychedelic mushrooms which are shown to have promising results in treating depression, addiction, and PTSD in early stage academic studies. So, we are checking out this psychedelic drug stock idea right now. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. With all of this in mind we’re going to take a look at the key hedge fund action regarding Taylor Morrison Home Corp (NYSE:TMHC).
How have hedgies been trading Taylor Morrison Home Corp (NYSE:TMHC)?
At the end of June, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 18% from one quarter earlier. By comparison, 19 hedge funds held shares or bullish call options in TMHC a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Howard Marks’s Oaktree Capital Management has the most valuable position in Taylor Morrison Home Corp (NYSE:TMHC), worth close to $124.1 million, accounting for 2.8% of its total 13F portfolio. Sitting at the No. 2 spot is Miller Value Partners, led by Bill Miller, holding a $66.9 million position; 3% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that hold long positions consist of Ken Heebner’s Capital Growth Management, Malcolm Levine’s Dendur Capital and Matthew Lindenbaum’s Basswood Capital. In terms of the portfolio weights assigned to each position Dendur Capital allocated the biggest weight to Taylor Morrison Home Corp (NYSE:TMHC), around 10.22% of its 13F portfolio. Capital Growth Management is also relatively very bullish on the stock, dishing out 3.61 percent of its 13F equity portfolio to TMHC.
Now, key hedge funds were leading the bulls’ herd. SG Capital Management, managed by Ken Grossman and Glen Schneider, initiated the largest position in Taylor Morrison Home Corp (NYSE:TMHC). SG Capital Management had $7 million invested in the company at the end of the quarter. Brad Farber’s Atika Capital also initiated a $2.3 million position during the quarter. The other funds with brand new TMHC positions are Donald Sussman’s Paloma Partners, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, and Michael Gelband’s ExodusPoint Capital.
Let’s go over hedge fund activity in other stocks similar to Taylor Morrison Home Corp (NYSE:TMHC). These stocks are UMB Financial Corporation (NASDAQ:UMBF), Crocs, Inc. (NASDAQ:CROX), Ovintiv Inc. (NYSE:OVV), Brookfield Business Partners L.P. (NYSE:BBU), TreeHouse Foods Inc. (NYSE:THS), Vonage Holdings Corp. (NYSE:VG), and Apellis Pharmaceuticals, Inc. (NASDAQ:APLS). This group of stocks’ market caps are similar to TMHC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UMBF | 15 | 69356 | 0 |
| CROX | 37 | 634166 | 12 |
| OVV | 16 | 99529 | -3 |
| BBU | 3 | 1285 | 1 |
| THS | 32 | 223246 | 4 |
| VG | 30 | 257523 | 5 |
| APLS | 29 | 563976 | -1 |
| Average | 23.1 | 264154 | 2.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.1 hedge funds with bullish positions and the average amount invested in these stocks was $264 million. That figure was $370 million in TMHC’s case. Crocs, Inc. (NASDAQ:CROX) is the most popular stock in this table. On the other hand Brookfield Business Partners L.P. (NYSE:BBU) is the least popular one with only 3 bullish hedge fund positions. Taylor Morrison Home Corp (NYSE:TMHC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TMHC is 84.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 23% in 2020 through October 30th and still beat the market by 20.1 percentage points. Hedge funds were also right about betting on TMHC as the stock returned 12% since the end of Q2 (through 10/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
