D.R. Horton (DHI) Surged in Q3 Following Earnings That Surpassed Expectations

Heartland Advisors, an investment management company, released its “Heartland Mid Cap Value Fund” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. The portfolio increased 1.63% in the quarter, lagging behind the Russell Midcap® Value Index’s 6.18% gain. Stock selection was the primary contributor to the underperformance. The market witnessed the trends from Q2 accelerate, with optimism about the AI boom and rising electricity demand pushing large- and mid-cap growth stocks to new highs regardless of business model quality or valuation. Thus, the third quarter is a period when focusing on valuations can be detrimental. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its third-quarter 2025 investor letter, Heartland Mid Cap Value Fund highlighted stocks such as D.R. Horton, Inc. (NYSE:DHI). D.R. Horton, Inc. (NYSE:DHI) is a homebuilding company. The one-month return of D.R. Horton, Inc. (NYSE:DHI) was -11.92%, and its shares lost 18.99% of their value over the last 52 weeks. On October 10, 2025, D.R. Horton, Inc. (NYSE:DHI) stock closed at $151.58 per share, with a market capitalization of $45.19 billion.

Heartland Mid Cap Value Fund stated the following regarding D.R. Horton, Inc. (NYSE:DHI) in its third quarter 2025 investor letter:

“Consumer Discretionary. Our best-performing holding in the quarter, D.R. Horton, Inc. (NYSE:DHI), came from our Deep Value bucket. The largest homebuilder in the country, DHI enjoys around a 10% market share with scale advantages in a highly fragmented industry.

The company has a particularly strong position in entry-level homes. To produce affordable housing, D.R. Horton runs the business with speculative inventory, meaning it builds homes before buyer contracts are signed. This allows the company to operate the business more like a manufacturer thereby reducing unit costs with most savings passed to the homebuyer. To accommodate this business model, the company’s balance sheet is notably strong, allowing for maximum flexibility in capital allocation. For more than a decade, management pivoted the company’s balance sheet away from owning large swaths of undeveloped land, preferring instead to use less capital-intensive methods to source buildable lots. This self-help strategy reduced the capital commitment to the business and increased returns on investments…” (Click here to read the full text)

In another article, we covered D.R. Horton, Inc. (NYSE:DHI) and shared a bull case theory on the company. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.