The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Lennar Corporation (NYSE:LEN) based on those filings.
Lennar Corporation (NYSE:LEN) investors should pay attention to a decrease in hedge fund sentiment in recent months. Our calculations also showed that LEN isn't among the 30 most popular stocks among hedge funds (click for Q1 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.
If you'd ask most shareholders, hedge funds are assumed to be underperforming, old financial tools of the past. While there are over 8000 funds in operation today, We choose to focus on the bigwigs of this group, about 850 funds. It is estimated that this group of investors manage most of the smart money's total capital, and by keeping an eye on their top picks, Insider Monkey has found numerous investment strategies that have historically outpaced Mr. Market. Insider Monkey's flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
[caption id="attachment_192997" align="aligncenter" width="399"] Glenn Greenberg of Brave Warrior Capital[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this analyst’s “corona catalyst plays“. We interview hedge fund managers and ask them about best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's analyze the new hedge fund action encompassing Lennar Corporation (NYSE:LEN).
What have hedge funds been doing with Lennar Corporation (NYSE:LEN)?
Heading into the second quarter of 2020, a total of 57 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in LEN over the last 18 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.
More specifically, Greenhaven Associates was the largest shareholder of Lennar Corporation (NYSE:LEN), with a stake worth $367.9 million reported as of the end of September. Trailing Greenhaven Associates was Eminence Capital, which amassed a stake valued at $158.6 million. Brave Warrior Capital, Fisher Asset Management, and Miller Value Partners 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 Lennar Corporation (NYSE:LEN), around 13.69% of its 13F portfolio. Capital Growth Management is also relatively very bullish on the stock, earmarking 4.99 percent of its 13F equity portfolio to LEN.
Seeing as Lennar Corporation (NYSE:LEN) has experienced bearish sentiment from the smart money, logic holds that there was a specific group of hedgies that elected to cut their positions entirely last quarter. At the top of the heap, John Khoury's Long Pond Capital sold off the biggest investment of the 750 funds tracked by Insider Monkey, comprising an estimated $79.3 million in stock. Gavin M. Abrams's fund, Abrams Bison Investments, also dropped its stock, about $69.2 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 6 funds last quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Lennar Corporation (NYSE:LEN) but similarly valued. These stocks are Duke Realty Corporation (NYSE:DRE), Jack Henry & Associates, Inc. (NASDAQ:JKHY), Omnicom Group Inc. (NYSE:OMC), and Paycom Software Inc (NYSE:PAYC). This group of stocks' market values resemble LEN's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DRE,16,64897,-8 JKHY,27,277076,-2 OMC,31,327865,9 PAYC,30,239228,3 Average,26,227267,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $227 million. That figure was $1121 million in LEN's case. Omnicom Group Inc. (NYSE:OMC) is the most popular stock in this table. On the other hand Duke Realty Corporation (NYSE:DRE) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Lennar Corporation (NYSE:LEN) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 7.9% in 2020 through May 22nd but still managed to beat the market by 15.6 percentage points. Hedge funds were also right about betting on LEN as the stock returned 57.8% so far in Q2 (through May 22nd) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.