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Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 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 Eagle Materials, Inc. (NYSE:EXP) in this article.
Is EXP stock a buy? Eagle Materials, Inc. (NYSE:EXP) investors should pay attention to an increase in hedge fund sentiment in recent months. Eagle Materials, Inc. (NYSE:EXP) was in 37 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 41. There were 31 hedge funds in our database with EXP positions at the end of the third quarter. Our calculations also showed that EXP isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
In the financial world there are several metrics stock market investors employ to analyze publicly traded companies. A duo of the less known metrics are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the top picks of the best investment managers can outpace the market by a healthy margin (see the details here).
Ken Griffin of Citadel Investment Group
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 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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. Keeping this in mind we're going to take a glance at the recent hedge fund action regarding Eagle Materials, Inc. (NYSE:EXP).
Do Hedge Funds Think EXP Is A Good Stock To Buy Now?
At fourth quarter's end, a total of 37 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 19% from the third quarter of 2020. Below, you can check out the change in hedge fund sentiment towards EXP over the last 22 quarters. With hedge funds' capital changing hands, there exists an "upper tier" of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
The largest stake in Eagle Materials, Inc. (NYSE:EXP) was held by Citadel Investment Group, which reported holding $84.3 million worth of stock at the end of December. It was followed by Empyrean Capital Partners with a $52.9 million position. Other investors bullish on the company included Millennium Management, Sunriver Management, and Long Pond Capital. In terms of the portfolio weights assigned to each position Sunriver Management allocated the biggest weight to Eagle Materials, Inc. (NYSE:EXP), around 4.58% of its 13F portfolio. Hill City Capital is also relatively very bullish on the stock, designating 3.52 percent of its 13F equity portfolio to EXP.
As one would reasonably expect, some big names were leading the bulls' herd. Long Pond Capital, managed by John Khoury, assembled the biggest position in Eagle Materials, Inc. (NYSE:EXP). Long Pond Capital had $24.2 million invested in the company at the end of the quarter. Brad Dunkley and Blair Levinsky's Waratah Capital Advisors also initiated a $7.5 million position during the quarter. The following funds were also among the new EXP investors: Herbert Frazier's Hill City Capital, Michael Cowley's Sandbar Asset Management, and Ken Grossman and Glen Schneider's SG Capital Management.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Eagle Materials, Inc. (NYSE:EXP) but similarly valued. These stocks are Endava plc (NYSE:DAVA), Crocs, Inc. (NASDAQ:CROX), TechnipFMC plc (NYSE:FTI), Neogen Corporation (NASDAQ:NEOG), Foot Locker, Inc. (NYSE:FL), Upwork Inc. (NASDAQ:UPWK), and Tenet Healthcare Corp (NYSE:THC). This group of stocks' market caps are similar to EXP's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DAVA,10,162836,-1 CROX,41,620578,6 FTI,35,545147,4 NEOG,16,49316,-2 FL,26,773968,0 UPWK,34,548991,7 THC,34,1210954,1 Average,28,558827,2.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $559 million. That figure was $378 million in EXP's case. Crocs, Inc. (NASDAQ:CROX) is the most popular stock in this table. On the other hand Endava plc (NYSE:DAVA) is the least popular one with only 10 bullish hedge fund positions. Eagle Materials, Inc. (NYSE:EXP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EXP is 80.6. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7.9% in 2021 through April 1st and still beat the market by 0.4 percentage points. Hedge funds were also right about betting on EXP as the stock returned 33.5% since the end of Q4 (through 4/1) 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.