Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of D.R. Horton, Inc. (NYSE:DHI) based on that data and determine whether they were really smart about the stock.
D.R. Horton, Inc. (NYSE:DHI) investors should be aware of an increase in hedge fund sentiment of late. D.R. Horton, Inc. (NYSE:DHI) was in 51 hedge funds’ portfolios at the end of September. The all time high for this statistic is 66. Our calculations also showed that DHI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind let’s take a look at the fresh hedge fund action surrounding D.R. Horton, Inc. (NYSE:DHI).
Do Hedge Funds Think DHI Is A Good Stock To Buy Now?
At the end of September, a total of 51 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from one quarter earlier. By comparison, 62 hedge funds held shares or bullish call options in DHI a year ago. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, John Armitage’s Egerton Capital Limited has the largest position in D.R. Horton, Inc. (NYSE:DHI), worth close to $722.1 million, corresponding to 3.4% of its total 13F portfolio. The second most bullish fund manager is George Soros of Soros Fund Management, with a $363 million position; 6.7% of its 13F portfolio is allocated to the company. Some other peers with similar optimism contain Greg Poole’s Echo Street Capital Management, Brandon Haley’s Holocene Advisors and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Soros Fund Management allocated the biggest weight to D.R. Horton, Inc. (NYSE:DHI), around 6.7% of its 13F portfolio. Covalent Capital Partners is also relatively very bullish on the stock, setting aside 5.72 percent of its 13F equity portfolio to DHI.
As one would reasonably expect, key money managers were leading the bulls’ herd. Anomaly Capital Management, managed by Ben Jacobs, established the most valuable position in D.R. Horton, Inc. (NYSE:DHI). Anomaly Capital Management had $73.5 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $44.5 million position during the quarter. The other funds with brand new DHI positions are John Khoury’s Long Pond Capital, Mark Coe’s Intrinsic Edge Capital, and Paul Tudor Jones’s Tudor Investment Corp.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as D.R. Horton, Inc. (NYSE:DHI) but similarly valued. We will take a look at The Kroger Co. (NYSE:KR), Ameriprise Financial, Inc. (NYSE:AMP), Willis Towers Watson Public Limited Company (NASDAQ:WLTW), Garmin Ltd. (NASDAQ:GRMN), TELUS Corporation (NYSE:TU), Paycom Software Inc (NYSE:PAYC), and ANSYS, Inc. (NASDAQ:ANSS). All of these stocks’ market caps match DHI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KR | 39 | 3919870 | 0 |
| AMP | 40 | 1309163 | 3 |
| WLTW | 75 | 5055019 | 5 |
| GRMN | 30 | 465208 | 5 |
| TU | 12 | 141291 | -1 |
| PAYC | 40 | 1424558 | 1 |
| ANSS | 38 | 1493156 | -8 |
| Average | 39.1 | 1972609 | 0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 39.1 hedge funds with bullish positions and the average amount invested in these stocks was $1973 million. That figure was $2185 million in DHI’s case. Willis Towers Watson Public Limited Company (NASDAQ:WLTW) is the most popular stock in this table. On the other hand TELUS Corporation (NYSE:TU) is the least popular one with only 12 bullish hedge fund positions. D.R. Horton, Inc. (NYSE:DHI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DHI is 64.1. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. Hedge funds were also right about betting on DHI as the stock returned 6.5% since the end of Q3 (through 1/31) 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.
