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At Insider Monkey, we pore over the filings of nearly 873 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of June 30th. In this article, we will use that wealth of knowledge to determine whether or not Lennar Corporation (NYSE:LEN) makes for a good investment right now.
Is Lennar Corporation (NYSE:LEN) a bargain? Prominent investors were taking an optimistic view. The number of long hedge fund bets went up by 1 lately. Lennar Corporation (NYSE:LEN) was in 50 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 66. Our calculations also showed that LEN isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Rajiv Jain of GQG Partners
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. 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 homepage. Keeping this in mind we're going to take a gander at the recent hedge fund action encompassing Lennar Corporation (NYSE:LEN).
Do Hedge Funds Think LEN Is A Good Stock To Buy Now?
At second quarter's end, a total of 50 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 2% from the previous quarter. The graph below displays the number of hedge funds with bullish position in LEN over the last 24 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Greenhaven Associates held the most valuable stake in Lennar Corporation (NYSE:LEN), which was worth $697.7 million at the end of the second quarter. On the second spot was GQG Partners which amassed $150.2 million worth of shares. Citadel Investment Group, AQR Capital Management, and Balyasny Asset Management 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 20.39% of its 13F portfolio. Third Avenue Management is also relatively very bullish on the stock, setting aside 5.2 percent of its 13F equity portfolio to LEN.
As industrywide interest jumped, specific money managers were breaking ground themselves. GQG Partners, managed by Rajiv Jain, initiated the most valuable position in Lennar Corporation (NYSE:LEN). GQG Partners had $150.2 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also made a $91.1 million investment in the stock during the quarter. The other funds with brand new LEN positions are Doug Gordon, Jon Hilsabeck and Don Jabro's Shellback Capital, Peter Seuss's Prana Capital Management, and Clint Carlson's Carlson Capital.
Let's check out hedge fund activity in other stocks similar to Lennar Corporation (NYSE:LEN). We will take a look at Ferguson plc (NYSE:FERG), PACCAR Inc (NASDAQ:PCAR), AMETEK, Inc. (NYSE:AME), Unity Software Inc. (NYSE:U), MPLX LP (NYSE:MPLX), Orange SA (NYSE:ORAN), and TELUS Corporation (NYSE:TU). This group of stocks' market values match LEN's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FERG,11,6877154,6 PCAR,28,623669,0 AME,38,912985,6 U,29,7263688,-10 MPLX,11,115640,3 ORAN,3,13039,1 TU,13,215295,-5 Average,19,2288781,0.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $2289 million. That figure was $1975 million in LEN's case. AMETEK, Inc. (NYSE:AME) is the most popular stock in this table. On the other hand Orange SA (NYSE:ORAN) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Lennar Corporation (NYSE:LEN) is more popular among hedge funds. Our overall hedge fund sentiment score for LEN is 78.7. 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 22.9% in 2021 through October 1st and still beat the market by 5.6 percentage points. Unfortunately LEN wasn't nearly as popular as these 5 stocks and hedge funds that were betting on LEN were disappointed as the stock returned -5.4% since the end of the second quarter (through 10/1) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.