M/I Homes Inc (NYSE:MHO) was in 14 hedge funds' portfolio at the end of the first quarter of 2013. MHO has seen an increase in support from the world's most elite money managers of late. There were 7 hedge funds in our database with MHO positions at the end of the previous quarter.
To most shareholders, hedge funds are viewed as worthless, outdated investment tools of yesteryear. While there are greater than 8000 funds with their doors open at present, we look at the aristocrats of this group, around 450 funds. It is widely believed that this group has its hands on most of all hedge funds' total capital, and by watching their top investments, we have formulated a number of investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum 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 trumped the S&P 500 index by 23.3 percentage points in 8 months (see the details here).
Just as integral, optimistic insider trading activity is a second way to parse down the financial markets. Just as you'd expect, there are lots of motivations for a corporate insider to cut shares of his or her company, but just one, very clear reason why they would buy. Plenty of academic studies have demonstrated the valuable potential of this tactic if you know where to look (learn more here).
With all of this in mind, let's take a gander at the key action regarding M/I Homes Inc (NYSE:MHO).
At the end of the first quarter, a total of 14 of the hedge funds we track held long positions in this stock, a change of 100% from the first quarter. With hedge funds' capital changing hands, there exists an "upper tier" of notable hedge fund managers who were increasing their stakes significantly.
When looking at the hedgies we track, Alydar Capital, managed by John Murphy, holds the largest position in M/I Homes Inc (NYSE:MHO). Alydar Capital has a $31.1 million position in the stock, comprising 2% of its 13F portfolio. Coming in second is Joe DiMenna of ZWEIG DIMENNA PARTNERS, with a $14.8 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Other hedgies with similar optimism include Cliff Asness's AQR Capital Management, Israel Englander's Millennium Management and Geoffrey Raynor's Q Investments (Specter Holdings).
Now, some big names have jumped into M/I Homes Inc (NYSE:MHO) headfirst. Alydar Capital, managed by John Murphy, created the largest position in M/I Homes Inc (NYSE:MHO). Alydar Capital had 31.1 million invested in the company at the end of the quarter. Bruce Kovner's Caxton Associates LP also made a $1.6 million investment in the stock during the quarter. The following funds were also among the new MHO investors: Matthew Tewksbury's Stevens Capital Management, Steven Owsley's Madison Street Partners, and Matthew Hulsizer's PEAK6 Capital Management.
Insider trading activity, especially when it's bullish, is at its handiest when the company in question has experienced transactions within the past half-year. Over the last six-month time frame, M/I Homes Inc (NYSE:MHO) has seen 1 unique insiders purchasing, and 4 insider sales (see the details of insider trades here).
Let's go over hedge fund and insider activity in other stocks similar to M/I Homes Inc (NYSE:MHO). These stocks are Meritage Homes Corp (NYSE:MTH), Xinyuan Real Estate Co., Ltd. (ADR) (NYSE:XIN), Beazer Homes USA, Inc. (NYSE:BZH), Gafisa SA (ADR) (NYSE:GFA), and Hovnanian Enterprises, Inc. (NYSE:HOV). This group of stocks belong to the residential construction industry and their market caps are similar to MHO's market cap.