The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Hovnanian Enterprises, Inc. (NYSE:HOV).
Is Hovnanian Enterprises, Inc. (NYSE:HOV) an excellent investment today? The best stock pickers were getting less bullish. The number of long hedge fund bets were trimmed by 1 in recent months. Hovnanian Enterprises, Inc. (NYSE:HOV) was in 8 hedge funds’ portfolios at the end of September. The all time high for this statistics is 16. Our calculations also showed that HOV isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 9 hedge funds in our database with HOV holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we’re going to view the latest hedge fund action encompassing Hovnanian Enterprises, Inc. (NYSE:HOV).
What does smart money think about Hovnanian Enterprises, Inc. (NYSE:HOV)?
At Q3’s end, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of -11% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in HOV over the last 21 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Hovnanian Enterprises, Inc. (NYSE:HOV) was held by Renaissance Technologies, which reported holding $7.7 million worth of stock at the end of September. It was followed by D E Shaw with a $7.6 million position. Other investors bullish on the company included Luxor Capital Group, Angelo Gordon & Co, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Lucas Capital Management allocated the biggest weight to Hovnanian Enterprises, Inc. (NYSE:HOV), around 0.53% of its 13F portfolio. Angelo Gordon & Co is also relatively very bullish on the stock, designating 0.33 percent of its 13F equity portfolio to HOV.
Due to the fact that Hovnanian Enterprises, Inc. (NYSE:HOV) has witnessed falling interest from hedge fund managers, it’s safe to say that there was a specific group of fund managers that slashed their positions entirely heading into Q4. Intriguingly, Israel Englander’s Millennium Management cut the biggest position of all the hedgies monitored by Insider Monkey, valued at about $0.4 million in stock, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors was right behind this move, as the fund cut about $0.3 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 1 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Hovnanian Enterprises, Inc. (NYSE:HOV) but similarly valued. We will take a look at Medicenna Therapeutics Corp. (NASDAQ:MDNA), Norwood Financial Corp. (NASDAQ:NWFL), Protective Insurance Corporation (NASDAQ:PTVCA), DBV Technologies SA (NASDAQ:DBVT), Calumet Specialty Products Partners, L.P (NASDAQ:CLMT), Altisource Portfolio Solutions S.A. (NASDAQ:ASPS), and Plymouth Industrial REIT, Inc. (NYSE:PLYM). This group of stocks’ market values are closest to HOV’s market value.
|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 4.9 hedge funds with bullish positions and the average amount invested in these stocks was $14 million. That figure was $27 million in HOV’s case. Plymouth Industrial REIT, Inc. (NYSE:PLYM) is the most popular stock in this table. On the other hand Medicenna Therapeutics Corp. (NASDAQ:MDNA) is the least popular one with only 2 bullish hedge fund positions. Hovnanian Enterprises, Inc. (NYSE:HOV) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HOV is 44. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. Hedge funds were also right about betting on HOV as the stock returned 16.1% since the end of Q3 (through 12/2) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.