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Was The Smart Money Right About Lennar Corporation (LEN)?

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  • LEN-B
  • ^GSPC

The Insider Monkey team has completed processing the quarterly 13F filings for the June quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Lennar Corporation (NYSE:LEN).

Lennar Corporation (NYSE:LEN) has experienced an increase in activity from the world's largest hedge funds recently. Lennar Corporation (NYSE:LEN) was in 50 hedge funds' portfolios at the end of June. 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).

In the financial world there are a multitude of gauges stock traders can use to assess their holdings. A couple of the most useful gauges are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the elite investment managers can outclass the S&P 500 by a healthy margin (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Clint Carlson of Carlson Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, billionaire John Paulson is loading up on the miners, so we are checking out stock pitches like this mining 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. With all of this in mind let's go over the latest hedge fund action regarding Lennar Corporation (NYSE:LEN).

Do Hedge Funds Think LEN Is A Good Stock To Buy Now?

At the end of June, a total of 50 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 2% from one quarter earlier. On the other hand, there were a total of 55 hedge funds with a bullish position in LEN a year ago. With hedgies' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Greenhaven Associates, managed by Edgar Wachenheim, holds the biggest position in Lennar Corporation (NYSE:LEN). Greenhaven Associates has a $697.7 million position in the stock, comprising 20.4% of its 13F portfolio. The second largest stake is held by GQG Partners, managed by Rajiv Jain, which holds a $150.2 million position; 0.4% of its 13F portfolio is allocated to the company. Some other professional money managers with similar optimism consist of Ken Griffin's Citadel Investment Group, Cliff Asness's AQR Capital Management and Dmitry Balyasny's Balyasny Asset Management. 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, earmarking 5.2 percent of its 13F equity portfolio to LEN.

With a general bullishness amongst the heavyweights, specific money managers were leading the bulls' herd. GQG Partners, managed by Rajiv Jain, established 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 initiated a $91.1 million position during the quarter. The other funds with new positions in the stock 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 go over 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 29.6% in 2021 through November 5th and still beat the market by 3.1 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 5.5% since the end of the second quarter (through 11/5) 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.