We can judge whether PulteGroup, Inc. (NYSE:PHM) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, research shows that these picks historically outperformed the market when we factor in known risk factors.
Hedge fund interest in PulteGroup, Inc. (NYSE:PHM) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare PHM to other stocks including Partnerre Ltd (NYSE:PRE), NetSuite Inc (NYSE:N), and Lululemon Athletica Inc. (NASDAQ:LULU) to get a better sense of its popularity.
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At the moment there are several indicators market participants use to assess stocks. A couple of the most under-the-radar indicators are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the best picks of the elite fund managers can trounce the S&P 500 by a superb margin (see the details here).
Now, we’re going to take a peek at the new action regarding PulteGroup, Inc. (NYSE:PHM).
What have hedge funds been doing with PulteGroup, Inc. (NYSE:PHM)?
Heading into Q4, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Legg Mason Capital Management, managed by Bill Miller, holds the most valuable position in PulteGroup, Inc. (NYSE:PHM). Legg Mason Capital Management has an $124 million position in the stock, comprising 2.5% of its 13F portfolio. Coming in second is Impala Asset Management, managed by Robert Bishop, which holds an $95 million position; 5.7% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors that are bullish comprise David Harding’s Winton Capital Management, Bruce Kovner’s Caxton Associates LP and Robert Hockett’s Covalent Capital Partners.
Since PulteGroup, Inc. (NYSE:PHM) has experienced a declination in interest from the smart money, it’s safe to say that there were a few hedgies who sold off their positions entirely in the third quarter. Interestingly, George Soros’s Soros Fund Management said goodbye to the biggest position of all the hedgies followed by Insider Monkey, comprising an estimated $63.9 million in stock. Ken Griffin’s fund, Citadel Investment Group, also dumped its stock, about $15.3 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as PulteGroup, Inc. (NYSE:PHM) but similarly valued. These stocks are Partnerre Ltd (NYSE:PRE), NetSuite Inc (NYSE:N), Lululemon Athletica inc. (NASDAQ:LULU), and FactSet Research Systems Inc. (NYSE:FDS). This group of stocks’ market values resemble PHM’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PRE | 24 | 816976 | -11 |
| N | 14 | 239478 | 1 |
| LULU | 32 | 837350 | -3 |
| FDS | 24 | 169594 | 1 |
As you can see these stocks had an average of 23.5 hedge funds with bullish positions and the average amount invested in these stocks was $516 million. That figure was $471 million in PHM’s case. Lululemon Athletica inc. (NASDAQ:LULU) is the most popular stock in this table. On the other hand NetSuite Inc (NYSE:N)) is the least popular one with only 14 bullish hedge fund positions. In comparison, PulteGroup, Inc. (NYSE:PHM) has attracted attention from investors, even though it is not the most popular stock in this particular group. Although this may imply it is a good stock to buy, our extensive analyses suggest it is better to spend time focusing on stocks that most hedge funds are collectively fond of, such as LULU in this particular case.
