Is Lennar Corporation (NYSE:LEN) a worthy investment today? The smart money is reducing their bets on the stock. The number of bullish hedge fund positions were cut by 4 recently.
In today’s marketplace, there are dozens of methods shareholders can use to analyze Mr. Market. Two of the best are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the top hedge fund managers can outclass their index-focused peers by a superb amount (see just how much).
Just as key, positive insider trading activity is a second way to break down the stock market universe. Just as you'd expect, there are plenty of reasons for a corporate insider to sell shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Many academic studies have demonstrated the valuable potential of this tactic if piggybackers understand where to look (learn more here).
With these "truths" under our belt, we're going to take a peek at the recent action encompassing Lennar Corporation (NYSE:LEN).
Heading into 2013, a total of 44 of the hedge funds we track held long positions in this stock, a change of -8% from the previous quarter. With hedgies' capital changing hands, there exists a few notable hedge fund managers who were upping their holdings meaningfully.
When looking at the hedgies we track, Capital Growth Management, managed by Ken Heebner, holds the most valuable position in Lennar Corporation (NYSE:LEN). Capital Growth Management has a $188 million position in the stock, comprising 4.9% of its 13F portfolio. The second largest stake is held by Duquesne Capital, managed by Stanley Druckenmiller, which held a $108 million position; the fund has 8.4% of its 13F portfolio invested in the stock. Some other peers that are bullish include Ken Griffin's Citadel Investment Group, Jim Simons's Renaissance Technologies and Jeffrey Vinik's Vinik Asset Management.
Because Lennar Corporation (NYSE:LEN) has witnessed a declination in interest from the smart money, logic holds that there is a sect of funds who were dropping their entire stakes in Q4. Intriguingly, Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners said goodbye to the biggest position of the "upper crust" of funds we track, worth close to $20 million in stock.. Peter J. Eichler Jr.'s fund, Aletheia Research and Management, also dumped its stock, about $18 million worth. These transactions are important to note, as total hedge fund interest was cut by 4 funds in Q4.
Insider purchases made by high-level executives is at its handiest when the primary stock in question has seen transactions within the past six months. Over the latest 180-day time period, Lennar Corporation (NYSE:LEN) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
With the returns exhibited by our time-tested strategies, retail investors must always pay attention to hedge fund and insider trading sentiment, and Lennar Corporation (NYSE:LEN) is no exception.
Insider Monkey's small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.