Investing in small cap stocks has historically been a way to outperform the market, as small cap companies typically grow faster on average than the blue chips. That outperformance comes with a price, however, as there are occasional periods of higher volatility. The time period between June 25 and the end of October was one of those periods, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points. Given that the funds we track tend to have a disproportionate amount of their portfolios in smaller cap stocks, they have seen some volatility in their portfolios too. Actually, their moves are potentially one of the factors that contributed to this volatility. In this article, we use our extensive database of hedge fund holdings to find out what the smart money thinks of Tri Pointe Homes Inc (NYSE:TPH).
Is Tri Pointe Homes Inc (NYSE:TPH) a bargain? The smart money is getting less optimistic. The number of long hedge fund bets dropped by 3 recently. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Fulton Financial Corp (NASDAQ:FULT), Northern Tier Energy LP (NYSE:NTI), and Zynga Inc (NASDAQ:ZNGA) to gather more data points.
To the average investor, there are a lot of metrics shareholders can use to appraise publicly traded companies. A duo of the most underrated metrics are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the best fund managers can trounce the S&P 500 by a solid margin (see the details here).
With all of this in mind, we’re going to take a gander at the latest action regarding Tri Pointe Homes Inc (NYSE:TPH).
What have hedge funds been doing with Tri Pointe Homes Inc (NYSE:TPH)?
Heading into Q4, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a drop of 13% from the second quarter. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Clint Carlson’s Carlson Capital has the most valuable position in Tri Pointe Homes Inc (NYSE:TPH), worth close to $100 million, corresponding to 1.2% of its total 13F portfolio. The second largest stake is held by Murray Stahl of Horizon Asset Management, with an $85.6 million position; 1.6% of its 13F portfolio is allocated to the company. Other peers with similar optimism comprise John Osterweis’ Osterweis Capital Management, David Einhorn’s Greenlight Capital and Ken Griffin’s Citadel Investment Group.