Is M.D.C. Holdings, Inc. (NYSE:MDC) a good investment?
In the eyes of many investors, hedge funds are seen as bloated, old financial vehicles of a forgotten age. Although there are more than 8,000 hedge funds trading in present day, this site focuses on the top tier of this club, close to 525 funds. Analysts calculate that this group controls the majority of the hedge fund industry's total assets, and by paying attention to their best equity investments, we've determined a number of investment strategies that have historically beaten the S&P 500. Our small-cap hedge fund strategy outstripped 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 outclassed the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).
Equally as key, optimistic insider trading sentiment is another way to look at the financial markets. There are a variety of incentives for an executive to cut shares of his or her company, but just one, very simple reason why they would initiate a purchase. Several academic studies have demonstrated the useful potential of this method if shareholders understand where to look (learn more here).
Furthermore, we're going to discuss the recent info about M.D.C. Holdings, Inc. (NYSE:MDC).
At Q2's end, a total of 17 of the hedge funds we track held long positions in this stock, a change of 21% from the first quarter. With the smart money's capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their stakes significantly.
When using filings from the hedgies we track, Israel Englander's Millennium Management had the largest position in M.D.C. Holdings, Inc. (NYSE:MDC), worth close to $38.4 million, accounting for 0.1% of its total 13F portfolio. The second largest stake is held by Jim Simons of Renaissance Technologies, with a $13.9 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedge funds with similar optimism include Ken Griffin's Citadel Investment Group, Chuck Royce's Royce & Associates and Greg Poole's Echo Street Capital Management.
As one would understandably expect, certain bigger names have been driving this bullishness. Millennium Management, managed by Israel Englander, created the most outsized position in M.D.C. Holdings, Inc. (NYSE:MDC). Millennium Management had 38.4 million invested in the company at the end of the quarter. Jim Simons's Renaissance Technologies also made a $13.9 million investment in the stock during the quarter. The following funds were also among the new MDC investors: Ken Griffin's Citadel Investment Group, Chuck Royce's Royce & Associates, and Greg Poole's Echo Street Capital Management.
Bullish insider trading is most useful when the primary stock in question has seen transactions within the past half-year. Over the last six-month time frame, M.D.C. Holdings, Inc. (NYSE:MDC) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We'll also examine the relationship between both of these indicators 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 the members of the residential construction industry and their market caps are closest to MDC's market cap.