Hedge Funds Aren’t Done Buying PulteGroup, Inc. (PHM)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of PulteGroup, Inc. (NYSE:PHM).

Is PulteGroup, Inc. (NYSE:PHM) an outstanding investment right now? The smart money is betting on the stock. The number of bullish hedge fund positions moved up by 2 recently. Our calculations also showed that PHM isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). PHM was in 36 hedge funds’ portfolios at the end of March. There were 34 hedge funds in our database with PHM holdings at the end of the previous quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

At the moment there are several signals market participants employ to analyze stocks. A pair of the most useful signals are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the elite money managers can beat the S&P 500 by a superb amount (see the details here).

Ken Heebner of Capital Growth Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a look at the latest hedge fund action regarding PulteGroup, Inc. (NYSE:PHM).

What does smart money think about PulteGroup, Inc. (NYSE:PHM)?

At Q1’s end, a total of 36 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from the previous quarter. The graph below displays the number of hedge funds with bullish position in PHM over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Cliff Asness’s AQR Capital Management has the biggest position in PulteGroup, Inc. (NYSE:PHM), worth close to $105.1 million, accounting for 0.2% of its total 13F portfolio. On AQR Capital Management’s heels is Greenhaven Associates, led by Edgar Wachenheim, holding a $74.5 million position; 2.8% of its 13F portfolio is allocated to the company. Other professional money managers that are bullish contain Noam Gottesman’s GLG Partners, Renaissance Technologies and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Capital Growth Management allocated the biggest weight to PulteGroup, Inc. (NYSE:PHM), around 3.13% of its 13F portfolio. Greenhaven Associates is also relatively very bullish on the stock, earmarking 2.77 percent of its 13F equity portfolio to PHM.

With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Capital Growth Management, managed by Ken Heebner, assembled the biggest position in PulteGroup, Inc. (NYSE:PHM). Capital Growth Management had $22.3 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $17.8 million investment in the stock during the quarter. The other funds with brand new PHM positions are Anand Parekh’s Alyeska Investment Group, Chuck Royce’s Royce & Associates, and Joel Greenblatt’s Gotham Asset Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as PulteGroup, Inc. (NYSE:PHM) but similarly valued. These stocks are GCI Liberty, Inc. (NASDAQ:GLIBA), BanColombia S.A. (NYSE:CIB), Formula One Group (NASDAQ:FWONA), and Albemarle Corporation (NYSE:ALB). This group of stocks’ market valuations are similar to PHM’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GLIBA 49 1833581 2
CIB 11 86861 -3
FWONA 17 257605 -5
ALB 24 73093 1
Average 25.25 562785 -1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.25 hedge funds with bullish positions and the average amount invested in these stocks was $563 million. That figure was $466 million in PHM’s case. GCI Liberty, Inc. (NASDAQ:GLIBA) is the most popular stock in this table. On the other hand BanColombia S.A. (NYSE:CIB) is the least popular one with only 11 bullish hedge fund positions. PulteGroup, Inc. (NYSE:PHM) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on PHM as the stock returned 52.2% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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