In this article, we will take a look at the top 5 homebuilder stocks sorted by hedge fund sentiment. To see more such companies, go directly to List of Homebuilder Stocks Sorted By Hedge Fund Sentiment.
5. KB Home (NYSE:KBH)
Number of Hedge Fund Holders: 31
JPMorgan recently upgraded KB Home (NYSE:KBH) stock after the company posted strong quarterly results and gave a solid 2023 guidance. KB Home (NYSE:KBH) expects its housing revenue in 2023 to come in the range of $5.20 billion to $5.90 billion, versus the consensus estimate of $5.34 billion.
As of the end of the fourth quarter of 2022, 31 hedge funds tracked by Insider Monkey had stakes in KB Home (NYSE:KBH), up from 24 funds in the previous quarter.
4. Toll Brothers, Inc. (NYSE:TOL)
Number of Hedge Fund Holders: 37
Shares of Toll Brothers, Inc. (NYSE:TOL) have gained about 22% year to date through April 24. In March, Toll Brothers, Inc. (NYSE:TOL) upped its dividend by 5%. The latest dividend was payable on April 21.
The biggest hedge fund stakeholders of Toll Brothers, Inc. (NYSE:TOL) according to Insider Monkey’s database of 943 hedge funds include Edgar Wachenheim’s Greenhaven Associates, Cliff Asness’s AQR Capital Management and Brandon Haley’s Holocene Advisors.
Baron Funds made the following comment about Toll Brothers, Inc. (NYSE:TOL) in its Q4 2022 investor letter:
“Toll Brothers, Inc. (NYSE:TOL) is the leading luxury homebuilder in the U.S. with a capable management team as well as a large and valuable owned land portfolio. Toll Brothers is more insulated than its peers from elevated mortgage rates because 20% of the buyers of Toll homes pay 100% in cash.
At its year-end 2022 price of only $49.92/share, the company is valued at only 0.83 times our estimate of 2023 tangible book value of $60/share. Historically, Toll Brothers’ shares have been valued, on average, at 1.4 times book value and a peak multiple of approximately 2.0 times tangible book value. If the shares recover in the next few years and trade only to the company’s long-term average multiple of 1.4 times book value, Toll Brothers’ share price would increase 82% to $91 per share.”
3. NVR, Inc. (NYSE:NVR)
Number of Hedge Fund Holders: 39
Pennsylvania-based home construction and mortgage services company NVR, Inc. (NYSE:NVR) ranks 3rd in our list of the top homebuilding stocks popular among elite hedge funds. As of the end of the last quarter of 2022, 39 hedge funds had stakes in NVR, Inc. (NYSE:NVR). The most notable hedge fund stakeholder of NVR, Inc. (NYSE:NVR) was Ric Dillon’s Diamond Hill Capital which owns a $534 million stake.
Ensemble Capital made the following comment about NVR, Inc. (NYSE:NVR) in its Q1 2023 investor letter:
“NVR, Inc. (NYSE:NVR) (+20.80%): Despite the large decline in home sales, a decline in home prices, and mortgage rates that are still twice as high as the lows of 2021, NVR’s stock is trading at its all-time high other than a brief period from December 2021 to January 2022. Our investment thesis on housing related stocks has been that the very low levels of new home building between the great financial crisis and COVID created a significant shortage of single family housing. While NVR, like all home builders, are seeing the impact of higher mortgage rates on their business, the inventory of existing homes on the market today stands at record low levels. The lack of existing homes available for sale, something we think will persist due to existing homeowners having locked in low mortgage rates and so not being interested in moving unless they have to, means that the home buyers who do want to buy a home will need to turn more frequently to the new home market.”
2. D.R. Horton, Inc. (NYSE:DHI)
Number of Hedge Fund Holders: 46
As of the end of the fourth quarter of 2022, Edgar Wachenheim’s Greenhaven Associates was the biggest hedge fund stakeholder of D.R. Horton, Inc. (NYSE:DHI), with a $335 million stake. D.R. Horton, Inc. (NYSE:DHI) recently jumped after the company posted strong Q2 results and gave a solid guidance.
1. Lennar Corporation (NYSE:LEN)
Number of Hedge Fund Holders: 54
Miami-based Lennar Corporation (NYSE:LEN) ranks first in our list of the biggest homebuilder companies popular among hedge funds. As of the end of the fourth quarter of 2022, 54 hedge funds had stakes in Lennar Corporation (NYSE:LEN). The biggest stakeholder of Lennar Corporation (NYSE:LEN) was Edgar Wachenheim’s Greenhaven Associates which owns an $838 million stake in the company.
You can also take a peek at 10 Most Profitable Small Businesses in 2023 and 10 Best April Dividend Stocks To Buy.
