Hovnanian Enterprises, Inc. (NYSE:HOV) shareholders have witnessed a decrease in enthusiasm from smart money of late.
To the average investor, there are plenty of indicators shareholders can use to monitor the equity markets. A pair of the most underrated are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the top money managers can outperform the S&P 500 by a solid amount (see just how much).
Just as key, optimistic insider trading sentiment is a second way to parse down the stock market universe. As the old adage goes: there are plenty of motivations for an insider to sell shares of his or her company, but only one, very simple reason why they would initiate a purchase. Several empirical studies have demonstrated the useful potential of this strategy if shareholders understand what to do (learn more here).
With all of this in mind, we’re going to take a glance at the latest action encompassing Hovnanian Enterprises, Inc. (NYSE:HOV).
How are hedge funds trading Hovnanian Enterprises, Inc. (NYSE:HOV)?
At the end of the fourth quarter, a total of 12 of the hedge funds we track were long in this stock, a change of -25% from the previous quarter. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were increasing their holdings significantly.
When looking at the hedgies we track, Alden Global Capital, managed by Randall Smith, holds the biggest position in Hovnanian Enterprises, Inc. (NYSE:HOV). Alden Global Capital has a $35 million position in the stock, comprising 6.2% of its 13F portfolio. Coming in second is Capital Growth Management, managed by Ken Heebner, which held a $21 million position; 0.5% of its 13F portfolio is allocated to the stock. Remaining hedgies that hold long positions include Don Morgan’s Brigade Capital, Chuck Royce’s Royce & Associates and Don Morgan’s Brigade Capital.
Since Hovnanian Enterprises, Inc. (NYSE:HOV) has experienced declining sentiment from hedge fund managers, it’s safe to say that there lies a certain “tier” of funds who sold off their full holdings heading into 2013. Interestingly, Joe DiMenna’s ZWEIG DIMENNA PARTNERS said goodbye to the biggest investment of the 450+ funds we monitor, worth close to $4 million in stock.. Robert Jaffe’s fund, Force Capital, also dumped its stock, about $1 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 4 funds heading into 2013.
How have insiders been trading Hovnanian Enterprises, Inc. (NYSE:HOV)?
Insider buying is best served when the primary stock in question has seen transactions within the past 180 days. Over the latest 180-day time period, Hovnanian Enterprises, Inc. (NYSE:HOV) has seen zero unique insiders buying, and 2 insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to Hovnanian Enterprises, Inc. (NYSE:HOV). These stocks are Meritage Homes Corp (NYSE:MTH), Xinyuan Real Estate Co., Ltd. (ADR) (NYSE:XIN), Beazer Homes USA, Inc. (NYSE:BZH), M/I Homes Inc (NYSE:MHO), and Gafisa SA (ADR) (NYSE:GFA). This group of stocks belong to the residential construction industry and their market caps resemble HOV’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Meritage Homes Corp (NYSE:MTH)||8||0||7|
|Xinyuan Real Estate Co., Ltd. (ADR) (NYSE:XIN)||4||0||0|
|Beazer Homes USA, Inc. (NYSE:BZH)||16||9||0|
|M/I Homes Inc (NYSE:MHO)||6||1||3|
|Gafisa SA (ADR) (NYSE:GFA)||5||0||0|
With the results shown by our research, everyday investors should always watch hedge fund and insider trading sentiment, and Hovnanian Enterprises, Inc. (NYSE:HOV) is no exception.