Palm Valley Capital Management, an investment management firm, published its second-quarter 2022 investor letter – a copy of which can be downloaded here. Two-thirds of the non-financial members in the Russell 2000 Index are either unprofitable or trade above 20x EV/EBIT. The median EBIT growth since 2019 for small caps in the sub 10x EV/EBIT bucket is an astonishing 194%. Try to spend some time taking a look at the fund’s top 5 holdings to be informed about their best picks for 2022.
In its Q2 2022 investor letter, Palm Valley Capital Fund mentioned D.R. Horton, Inc. (NYSE:DHI) and explained its insights for the company. Founded in 1978, D.R. Horton, Inc. (NYSE:DHI) is an Arlington, Texas-based home construction company with a $25.8 billion market capitalization. D.R. Horton, Inc. (NYSE:DHI) delivered a -32.26% return since the beginning of the year, while its 12-month returns are down by -14.88%. The stock closed at $73.46 per share on July 15, 2022.
Here is what Palm Valley Capital Fund has to say about D.R. Horton, Inc. (NYSE:DHI) in its Q2 2022 investor letter:
“Vidler Water was acquired by homebuilder D.R. Horton (NYSE:DHI) during the second quarter for $15.75 per share, a modest 19% premium to the 90-day volume weighted average price. D.R. Horton can use Vidler’s water rights to satisfy government requirements to have water resources available before it breaks ground on new housing developments in Nevada. The takeover price was below our valuation, but D.R. Horton was the only real buyer who stepped up to the plate for Vidler’s assets. The deal appears to have leaked early, since the stock surged in the weeks before the announcement.”
Our calculations show that D.R. Horton, Inc. (NYSE:DHI) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. D.R. Horton, Inc. (NYSE:DHI) was in 52 hedge fund portfolios at the end of the second quarter of 2022, compared to 54 funds in the previous quarter. D.R. Horton, Inc. (NYSE:DHI) delivered a 1.31% return in the past 3 months.
In April 2022, we also shared another hedge fund’s views on D.R. Horton, Inc. (NYSE:DHI) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q2 page.
Disclosure: None. This article is originally published at Insider Monkey.