Is M.D.C. Holdings, Inc. (NYSE:MDC) an attractive investment today? Hedge funds are in a bullish mood. The number of long hedge fund positions improved by 1 lately.
If you'd ask most investors, hedge funds are perceived as slow, old financial vehicles of yesteryear. While there are more than 8000 funds trading at present, we at Insider Monkey look at the leaders of this club, around 450 funds. Most estimates calculate that this group controls the lion's share of the hedge fund industry's total asset base, and by tracking their best investments, we have revealed a few investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we've started sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).
Equally as key, bullish insider trading activity is a second way to parse down the financial markets. There are a number of stimuli for a bullish insider to drop shares of his or her company, but only one, very simple reason why they would initiate a purchase. Various empirical studies have demonstrated the useful potential of this tactic if you understand where to look (learn more here).
With these "truths" under our belt, we're going to take a peek at the key action encompassing M.D.C. Holdings, Inc. (NYSE:MDC).
In preparation for this quarter, a total of 14 of the hedge funds we track were long in this stock, a change of 8% from the previous quarter. With hedgies' positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their holdings significantly.
When looking at the hedgies we track, Ken Griffin's Citadel Investment Group had the largest position in M.D.C. Holdings, Inc. (NYSE:MDC), worth close to $34.3 million, accounting for 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Israel Englander of Millennium Management, with a $27.9 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining peers that hold long positions include Jim Simons's Renaissance Technologies, Chuck Royce's Royce & Associates and Cliff Asness's AQR Capital Management.
As aggregate interest increased, some big names were breaking ground themselves. Millennium Management, managed by Israel Englander, initiated the most outsized position in M.D.C. Holdings, Inc. (NYSE:MDC). Millennium Management had 27.9 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also initiated a $1.1 million position during the quarter. The other funds with brand new MDC positions are Paul Tudor Jones's Tudor Investment Corp, Ken Gray and Steve Walsh's Bryn Mawr Capital, and Steven Cohen's SAC Capital Advisors.
Insider purchases made by high-level executives is most useful when the company in focus has experienced transactions within the past half-year. Over the last six-month time frame, M.D.C. Holdings, Inc. (NYSE:MDC) has experienced zero unique insiders buying, and 4 insider sales (see the details of insider trades here).
Let's also examine hedge fund and insider activity in other stocks similar to M.D.C. Holdings, Inc. (NYSE:MDC). These stocks are Gafisa SA (ADR) (NYSE:GFA), Meritage Homes Corp (NYSE:MTH), The Ryland Group, Inc. (NYSE:RYL), Standard Pacific Corp. (NYSE:SPF), and KB Home (NYSE:KBH). This group of stocks are in the residential construction industry and their market caps are similar to MDC's market cap.