Is NVR, Inc. (NYSE:NVR) a good investment?
To many investors, hedge funds are viewed as delayed, outdated investment tools of a forgotten age. Although there are more than 8,000 hedge funds with their doors open today, this site aim at the upper echelon of this club, close to 525 funds. It is assumed that this group has its hands on the lion’s share of all hedge funds’ total capital, and by keeping an eye on their highest quality investments, we’ve deciphered a number of investment strategies that have historically outpaced the S&P 500. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we‘ve began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 33 percentage points in 11 months (find the details here).
Just as crucial, optimistic insider trading sentiment is another way to analyze the world of equities. Obviously, there are plenty of motivations for a corporate insider to get rid of shares of his or her company, but just one, very simple reason why they would initiate a purchase. Various empirical studies have demonstrated the valuable potential of this tactic if investors know where to look (learn more here).
Thus, we’re going to discuss the recent info surrounding NVR, Inc. (NYSE:NVR).
How have hedgies been trading NVR, Inc. (NYSE:NVR)?
Heading into Q3, a total of 16 of the hedge funds we track were bullish in this stock, a change of -20% from the previous quarter. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes substantially.
When using filings from the hedgies we track, Pennant Capital Management, managed by Alan Fournier, holds the biggest position in NVR, Inc. (NYSE:NVR). Pennant Capital Management has a $239.1 million position in the stock, comprising 4.4% of its 13F portfolio. The second largest stake is held by Robert Bishop of Impala Asset Management, with a $190.4 million position; 10.7% of its 13F portfolio is allocated to the company. Some other hedge funds with similar optimism include Jason Capello’s Merchants’ Gate Capital, Lee Ainslie’s Maverick Capital and Ken Griffin’s Citadel Investment Group.
As NVR, Inc. (NYSE:NVR) has experienced dropping sentiment from the smart money’s best and brightest, we can see that there was a specific group of hedge funds who sold off their full holdings heading into Q2. At the top of the heap, Ken Heebner’s Capital Growth Management dumped the largest position of the “upper crust” of funds we key on, totaling an estimated $106.4 million in stock. John Lykouretzos’s fund, Hoplite Capital Management, also dropped its stock, about $42.5 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 4 funds heading into Q2.
What do corporate executives and insiders think about NVR, Inc. (NYSE:NVR)?
Bullish insider trading is particularly usable when the company in question has experienced transactions within the past six months. Over the last six-month time period, NVR, Inc. (NYSE:NVR) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
We’ll also take a look at the relationship between both of these indicators in other stocks similar to NVR, Inc. (NYSE:NVR). These stocks are The Ryland Group, Inc. (NYSE:RYL), Lennar Corporation (NYSE:LEN), PulteGroup, Inc. (NYSE:PHM), D.R. Horton, Inc. (NYSE:DHI), and Toll Brothers Inc (NYSE:TOL). This group of stocks are the members of the residential construction industry and their market caps match NVR’s market cap.