While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding PulteGroup, Inc. (NYSE:PHM).
PulteGroup, Inc. (NYSE:PHM) has seen an increase in support from the world’s most elite money managers lately. PulteGroup, Inc. (NYSE:PHM) was in 35 hedge funds’ portfolios at the end of September. The all time high for this statistic is 43. There were 34 hedge funds in our database with PHM positions at the end of the second quarter. Our calculations also showed that PHM 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. Now we’re going to view the latest hedge fund action surrounding PulteGroup, Inc. (NYSE:PHM).
Do Hedge Funds Think PHM Is A Good Stock To Buy Now?
At Q3’s end, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PHM over the last 25 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in PulteGroup, Inc. (NYSE:PHM) was held by AQR Capital Management, which reported holding $143.4 million worth of stock at the end of September. It was followed by D E Shaw with a $88.2 million position. Other investors bullish on the company included Millennium Management, Appaloosa Management LP, and Prana Capital Management. In terms of the portfolio weights assigned to each position Prana Capital Management allocated the biggest weight to PulteGroup, Inc. (NYSE:PHM), around 5.33% of its 13F portfolio. Basswood Capital is also relatively very bullish on the stock, dishing out 1.71 percent of its 13F equity portfolio to PHM.
As industrywide interest jumped, key money managers were leading the bulls’ herd. Balyasny Asset Management, managed by Dmitry Balyasny, created the biggest position in PulteGroup, Inc. (NYSE:PHM). Balyasny Asset Management had $50.3 million invested in the company at the end of the quarter. John Khoury’s Long Pond Capital also made a $32.8 million investment in the stock during the quarter. The following funds were also among the new PHM investors: Clint Carlson’s Carlson Capital, Brandon Haley’s Holocene Advisors, and Paul Tudor Jones’s Tudor Investment Corp.
Let’s go over hedge fund activity in other stocks similar to PulteGroup, Inc. (NYSE:PHM). We will take a look at Graco Inc. (NYSE:GGG), Allegion plc (NYSE:ALLE), Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF), Qiagen NV (NASDAQ:QGEN), Bruker Corporation (NASDAQ:BRKR), Godaddy Inc (NYSE:GDDY), and FMC Corporation (NYSE:FMC). This group of stocks’ market valuations are closest to PHM’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GGG | 32 | 258259 | 8 |
| ALLE | 32 | 1002211 | -5 |
| KOF | 6 | 460706 | -3 |
| QGEN | 21 | 599491 | -1 |
| BRKR | 31 | 552162 | 0 |
| GDDY | 37 | 2299629 | -2 |
| FMC | 28 | 349943 | -5 |
| Average | 26.7 | 788914 | -1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.7 hedge funds with bullish positions and the average amount invested in these stocks was $789 million. That figure was $772 million in PHM’s case. Godaddy Inc (NYSE:GDDY) is the most popular stock in this table. On the other hand Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF) is the least popular one with only 6 bullish hedge fund positions. PulteGroup, Inc. (NYSE:PHM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PHM is 77.2. 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on PHM as the stock returned 9% since the end of Q3 (through 11/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Pultegroup Inc (NYSE:PHM)
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Disclosure: None. This article was originally published at Insider Monkey.
