The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, when the S&P 500 Index was trading around the 4300 level. Since then investors decided to bet on the economic recovery and a stock market rebound even though we experienced a temporary correction in January. In this article you are going to find out whether hedge funds thought Toll Brothers Inc (NYSE:TOL) was a good investment heading into the fourth quarter and how the stock traded in comparison to the top hedge fund picks.
Is Toll Brothers Inc (NYSE:TOL) undervalued? The smart money was taking a bearish view. The number of long hedge fund positions were trimmed by 1 lately. Toll Brothers Inc (NYSE:TOL) was in 31 hedge funds’ portfolios at the end of September. The all time high for this statistic is 39. Our calculations also showed that TOL 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. Keeping this in mind let’s review the fresh hedge fund action regarding Toll Brothers Inc (NYSE:TOL).
Harold Levy of Iridian Asset Management
Do Hedge Funds Think TOL Is A Good Stock To Buy Now?
At Q3’s end, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -3% from the second quarter of 2021. On the other hand, there were a total of 39 hedge funds with a bullish position in TOL 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.
More specifically, Greenhaven Associates was the largest shareholder of Toll Brothers Inc (NYSE:TOL), with a stake worth $287.7 million reported as of the end of September. Trailing Greenhaven Associates was Southpoint Capital Advisors, which amassed a stake valued at $82.9 million. Iridian Asset Management, Eminence Capital, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Greenhaven Associates allocated the biggest weight to Toll Brothers Inc (NYSE:TOL), around 9.59% of its 13F portfolio. Iridian Asset Management is also relatively very bullish on the stock, earmarking 2.48 percent of its 13F equity portfolio to TOL.
Since Toll Brothers Inc (NYSE:TOL) has faced bearish sentiment from the smart money, it’s easy to see that there was a specific group of fund managers who were dropping their positions entirely in the third quarter. It’s worth mentioning that Peter Muller’s PDT Partners said goodbye to the largest stake of the “upper crust” of funds followed by Insider Monkey, worth about $4.2 million in stock. Donald Sussman’s fund, Paloma Partners, also cut its stock, about $3.1 million worth. These moves are important to note, as aggregate hedge fund interest fell by 1 funds in the third quarter.
Let’s check out hedge fund activity in other stocks similar to Toll Brothers Inc (NYSE:TOL). These stocks are First Industrial Realty Trust, Inc. (NYSE:FR), Euronet Worldwide, Inc. (NASDAQ:EEFT), ADT Inc. (NYSE:ADT), Marriott Vacations Worldwide Corporation (NYSE:VAC), Axalta Coating Systems Ltd (NYSE:AXTA), Celsius Holdings, Inc. (NASDAQ:CELH), and Kornit Digital Ltd. (NASDAQ:KRNT). All of these stocks’ market caps are similar to TOL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FR | 25 | 252097 | 3 |
| EEFT | 38 | 379793 | -2 |
| ADT | 18 | 335536 | -3 |
| VAC | 23 | 751056 | -12 |
| AXTA | 37 | 1048946 | -10 |
| CELH | 22 | 220511 | 2 |
| KRNT | 22 | 287826 | 1 |
| Average | 26.4 | 467966 | -3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.4 hedge funds with bullish positions and the average amount invested in these stocks was $468 million. That figure was $706 million in TOL’s case. Euronet Worldwide, Inc. (NASDAQ:EEFT) is the most popular stock in this table. On the other hand ADT Inc. (NYSE:ADT) is the least popular one with only 18 bullish hedge fund positions. Toll Brothers Inc (NYSE:TOL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TOL is 60.3. 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 TOL as the stock returned 7.2% since the end of Q3 (through 1/31) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Toll Brothers Inc. (NYSE:TOL)
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Disclosure: None. This article was originally published at Insider Monkey.
