Smart Money is Moving Out of KB Home (KBH)

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Seeing as KB Home (NYSE:KBH) has witnessed declining sentiment from the smart money, we can see that there were a few fund managers that elected to cut their positions entirely in the third quarter. At the top of the heap, Peter Muller’s PDT Partners dropped the biggest investment of all the hedgies watched by Insider Monkey, totaling close to $13.3 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund dropped about $12.5 million worth of shares. These transactions are important to note, as total hedge fund interest dropped by 6 funds in the third quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as KB Home (NYSE:KBH) but similarly valued. We will take a look at Vonage Holdings Corp. (NYSE:VG), Cohen & Steers, Inc. (NYSE:CNS), Northwest Natural Gas Co (NYSE:NWN), and Stillwater Mining Company (NYSE:SWC). All of these stocks’ market caps match KBH’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
VG 19 109893 3
CNS 13 63867 -1
NWN 11 22236 0
SWC 10 196295 -8

As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $98 million. That figure was $329 million in KBH’s case. Vonage Holdings Corp. (NYSE:VG) is the most popular stock in this table. On the other hand Stillwater Mining Company (NYSE:SWC) is the least popular one with only 10 bullish hedge fund positions. KB Home (NYSE:KBH) is tied with VG as the most popular stock in this group and has far more money invested in it. This is a positive signal, making it a good candidate to consider a long position in, despite the fall in ownership during Q3.

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