While the market is being driven by short-term sentiment influenced by uncertainty regarding the future of the interest rate environment in the U.S, the low commodity prices, and the economic dip in China, many smart money investors are keeping their optimism regarding the current bull run, while nonetheless hedging many of their long positions. However, as we know, big investors usually buy stocks with strong fundamentals, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding NVR, Inc. (NYSE:NVR).
NVR, Inc. investors should pay attention to a decrease in enthusiasm from smart money recently. NVR was in 21 hedge funds’ portfolios at the end of September. There were 23 hedge funds in our database with NVR holdings at the end of the previous quarter. At the end of this article we will also compare NVR to other stocks including TECO Energy, Inc. (NYSE:TE), Qihoo 360 Technology Co Ltd (NYSE:QIHU), and Mid America Apartment Communities Inc (NYSE:MAA) to get a better sense of its popularity.
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In the financial world there are several methods investors employ to grade stocks. A duo of the most under-the-radar methods are hedge fund and insider trading moves. We have shown that, historically, those who follow the best picks of the elite hedge fund managers can outclass their index-focused peers by a very impressive margin (see the details here).
Keeping this in mind, we’re going to view the latest action surrounding NVR, Inc. (NYSE:NVR).
Hedge fund activity in NVR, Inc. (NYSE:NVR)
At Q3’s end, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a 9% decline from the previous quarter. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were boosting their holdings significantly (or had already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Impala Asset Management, managed by Robert Bishop, holds the number one position in NVR, Inc. (NYSE:NVR). Impala Asset Management has a $319 million position in the stock, comprising 19.1% of its 13F portfolio. Coming in second is Pennant Capital Management, managed by Alan Fournier, which holds a $246.7 million position; 5.2% of its 13F portfolio is allocated to the stock. Other members of the smart money that hold long positions comprise Ken Heebner’s Capital Growth Management, Chuck Royce’s Royce & Associates, and David Harding’s Winton Capital Management.
Due to the fact that NVR, Inc. (NYSE:NVR) has witnessed bearish sentiment from the smart money, it’s easy to see that there were a few hedgies that decided to sell off their full holdings last quarter. It’s worth mentioning that Clint Murray’s Lodge Hill Capital sold off the biggest position of the 700 funds watched by Insider Monkey, totaling close to $18.6 million in stock. Joel Greenblatt’s fund, Gotham Asset Management, also said goodbye to its stock, about $12 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 2 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks similar to NVR, Inc. (NYSE:NVR). We will take a look at TECO Energy, Inc. (NYSE:TE), Qihoo 360 Technology Co Ltd (NYSE:QIHU), Mid America Apartment Communities Inc (NYSE:MAA), and Rite Aid Corporation (NYSE:RAD). This group of stocks’ market values match NVR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TE | 20 | 175421 | 9 |
| QIHU | 19 | 285259 | -13 |
| MAA | 18 | 248346 | 2 |
| RAD | 46 | 1003793 | -9 |
As you can see these stocks had an average of 25.75 hedge funds with bullish positions and the average amount invested in these stocks was $428 million. That figure was $791 million in NVR’s case. Rite Aid Corporation (NYSE:RAD) is the most popular stock in this table. On the other hand Mid America Apartment Communities Inc (NYSE:MAA) is the least popular one with only 18 bullish hedge fund positions. NVR, Inc. (NYSE:NVR) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard RAD might be a better candidate to consider a long position.
