Is PulteGroup, Inc. (NYSE:PHM) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is PHM a good stock to buy now? PulteGroup, Inc. (NYSE:PHM) investors should pay attention to an increase in hedge fund sentiment recently. PulteGroup, Inc. (NYSE:PHM) was in 43 hedge funds' portfolios at the end of September. The all time high for this statistic is 42. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that PHM isn't among the 30 most popular stocks among hedge funds (click for Q3 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 the 21st century investor’s toolkit there are plenty of tools shareholders use to grade publicly traded companies. A duo of the most under-the-radar tools are hedge fund and insider trading activity. We have shown that, historically, those who follow the best picks of the top fund managers can trounce the market by a superb amount (see the details here).
Robert Pohly of Samlyn Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy 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. Now we're going to take a gander at the latest hedge fund action encompassing PulteGroup, Inc. (NYSE:PHM).
Do Hedge Funds Think PHM Is A Good Stock To Buy Now?
At Q3's end, a total of 43 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 2% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards PHM over the last 21 quarters. With hedgies' sentiment swirling, there exists an "upper tier" of key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
Is PHM A Good Stock To Buy?
More specifically, AQR Capital Management was the largest shareholder of PulteGroup, Inc. (NYSE:PHM), with a stake worth $202.4 million reported as of the end of September. Trailing AQR Capital Management was GLG Partners, which amassed a stake valued at $162.4 million. Greenhaven Associates, Citadel Investment Group, and Arrowstreet Capital 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 Capital Growth Management allocated the biggest weight to PulteGroup, Inc. (NYSE:PHM), around 2.59% of its 13F portfolio. Appian Way Asset Management is also relatively very bullish on the stock, designating 2.18 percent of its 13F equity portfolio to PHM.
Consequently, key hedge funds have been driving this bullishness. Samlyn Capital, managed by Robert Pohly, initiated the biggest position in PulteGroup, Inc. (NYSE:PHM). Samlyn Capital had $31.4 million invested in the company at the end of the quarter. Anand Parekh's Alyeska Investment Group also initiated a $6.7 million position during the quarter. The other funds with brand new PHM positions are Andrew Byington's Appian Way Asset Management, Louis Bacon's Moore Global Investments, and Michael Gelband's ExodusPoint Capital.
Let's go over hedge fund activity in other stocks similar to PulteGroup, Inc. (NYSE:PHM). These stocks are PagSeguro Digital Ltd. (NYSE:PAGS), Fair Isaac Corporation (NYSE:FICO), NortonLifeLock Inc. (NASDAQ:NLOK), LINE Corporation (NYSE:LN), Trimble Inc. (NASDAQ:TRMB), Generac Holdings Inc. (NYSE:GNRC), and Ceridian HCM Holding Inc. (NYSE:CDAY). This group of stocks' market caps match PHM's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PAGS,24,1054247,-3 FICO,43,1273689,7 NLOK,34,1047927,-3 LN,4,6364,-4 TRMB,35,1030261,9 GNRC,43,733948,7 CDAY,36,1809089,6 Average,31.3,993646,2.7 [/table]
As you can see these stocks had an average of 31.3 hedge funds with bullish positions and the average amount invested in these stocks was $994 million. That figure was $1018 million in PHM's case. Fair Isaac Corporation (NYSE:FICO) is the most popular stock in this table. On the other hand LINE Corporation (NYSE:LN) is the least popular one with only 4 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 86. 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and beat the market again by 16.2 percentage points. Unfortunately PHM wasn't nearly as popular as these 20 stocks and hedge funds that were betting on PHM were disappointed as the stock returned -9.2% since the end of September (through 12/8) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.
