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LGI Homes (LGIH)’s Impressive Performance Contributed Greatly in Wasatch Global’s Portfolio

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  • LGIH
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Wasatch Global Investors, an investment management firm, published its “Wasatch Small Cap Growth Fund” first quarter 2021 investor letter – a copy of which can be downloaded here. A return of 4.08% was recorded by the fund’s investor class for the Q1 of 2021, trailing the benchmarks, Russell 2000 Growth Index, that increased 4.88%, and the Russell 2000 Index that rose to 12.70% for the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Wasatch Small Cap Growth Fund, in its Q1 2021 investor letter, mentioned LGI Homes, Inc. (NASDAQ: LGIH), and shared their insights on the company. LGI Homes, Inc. is a Texas, United States-based construction company that currently has a $4.1 billion market capitalization. Since the beginning of the year, LGIH delivered a 57.30% return, extending its 12-month gains to 138.30%. As of May 10, 2021, the stock closed at $181.07 per share.

Here is what Wasatch Small Cap Growth Fund has to say about LGI Homes, Inc. in its Q1 2021 investor letter:

"LGI Homes, Inc. (LGIH) was the top contributor to Fund performance for the first quarter. The company designs and builds homes in about 20 states. LGI has experienced impressive and consistent yearly growth since its 2013 initial public offering and now holds approximately 44,000 lots. LGI had a strong balance sheet going into the pandemic, which we believe will allow the company to continue to take advantage of the opportunities presented by still relatively low mortgage interest rates and the surge in housing demand. While the supply of building materials is tight and costs are rising, LGI has been able to pass these costs on to customers without hurting profits. Moreover, we think the credit standards for mortgage underwriting have been appropriate over the past several years.

Stocks that will gain from Joe Biden infrastructure plan
Stocks that will gain from Joe Biden infrastructure plan

Photo by Scott Blake on Unsplash

Our calculations show that LGI Homes, Inc. (NASDAQ: LGIH) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, LGI Homes, Inc. was in 23 hedge fund portfolios, compared to 25 funds in the third quarter. LGIH delivered a 41.07% return in the past 3 months.

The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best innovative stocks to buy 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 website:

Disclosure: None. This article is originally published at Insider Monkey.