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. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded Beazer Homes USA, Inc. (NYSE:BZH) and determine whether the smart money was really smart about this stock.
Beazer Homes USA, Inc. (NYSE:BZH) was in 12 hedge funds’ portfolios at the end of March. BZH has seen a decrease in enthusiasm from smart money in recent months. There were 14 hedge funds in our database with BZH holdings at the end of the previous quarter. Our calculations also showed that BZH 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).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a lot of tools market participants put to use to value publicly traded companies. A duo of the best tools are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the top picks of the top fund managers can trounce the market by a superb margin (see the details here).
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to go over the recent hedge fund action encompassing Beazer Homes USA, Inc. (NYSE:BZH).
What have hedge funds been doing with Beazer Homes USA, Inc. (NYSE:BZH)?
At the end of the first quarter, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from the previous quarter. On the other hand, there were a total of 9 hedge funds with a bullish position in BZH a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Royce & Associates held the most valuable stake in Beazer Homes USA, Inc. (NYSE:BZH), which was worth $7.1 million at the end of the third quarter. On the second spot was Millennium Management which amassed $3.8 million worth of shares. Whitebox Advisors, Saba Capital, and AQR Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Whitebox Advisors allocated the biggest weight to Beazer Homes USA, Inc. (NYSE:BZH), around 0.18% of its 13F portfolio. Saba Capital is also relatively very bullish on the stock, earmarking 0.12 percent of its 13F equity portfolio to BZH.
Since Beazer Homes USA, Inc. (NYSE:BZH) has faced falling interest from the entirety of the hedge funds we track, logic holds that there were a few fund managers who sold off their entire stakes heading into Q4. It’s worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dumped the largest position of the “upper crust” of funds monitored by Insider Monkey, comprising close to $7.4 million in stock, and Richard Driehaus’s Driehaus Capital was right behind this move, as the fund dropped about $0.7 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 2 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks similar to Beazer Homes USA, Inc. (NYSE:BZH). These stocks are Irsa Inversiones y Representaciones Sociedad Anonima (NYSE:IRS), Exagen Inc. (NASDAQ:XGN), Overstock.com, Inc. (NASDAQ:OSTK), and CASI Pharmaceuticals Inc (NASDAQ:CASI). This group of stocks’ market caps match BZH’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.25 hedge funds with bullish positions and the average amount invested in these stocks was $7 million. That figure was $22 million in BZH’s case. Irsa Inversiones y Representaciones Sociedad Anonima (NYSE:IRS) is the most popular stock in this table. On the other hand Exagen Inc. (NASDAQ:XGN) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Beazer Homes USA, Inc. (NYSE:BZH) is more popular among hedge funds. 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 returned 12.3% in 2020 through June 30th but still managed to beat the market by 15.5 percentage points. Hedge funds were also right about betting on BZH as the stock returned 56.4% in Q2 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.