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Is M.D.C. Holdings, Inc. (MDC) Going to Burn These Hedge Funds?

Insider Monkey finished processing more than 700 13F filings made by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th. What do these smart investors think about M.D.C. Holdings, Inc. (NYSE:MDC)?

Hedge fund interest in M.D.C. Holdings, Inc. (NYSE:MDC) 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 MDC to other stocks including Meritor Inc (NYSE:MTOR), Mueller Industries, Inc. (NYSE:MLI), and Solid Biosciences Inc. (NASDAQ:SLDB) to get a better sense of its popularity.

According to most investors, hedge funds are assumed to be underperforming, outdated financial tools of yesteryear. While there are over 8000 funds in operation at the moment, Our researchers hone in on the bigwigs of this group, about 700 funds. These hedge fund managers control the lion’s share of the hedge fund industry’s total asset base, and by following their best picks, Insider Monkey has come up with various investment strategies that have historically defeated the broader indices. Insider Monkey’s flagship hedge fund strategy beat the S&P 500 index by 6 percentage points per year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 24% since February 2017 (through December 3rd) even though the market was up nearly 23% during the same period. We just shared a list of 11 short targets in our latest quarterly update.

Chuck Royce

We’re going to analyze the latest hedge fund action surrounding M.D.C. Holdings, Inc. (NYSE:MDC).

What have hedge funds been doing with M.D.C. Holdings, Inc. (NYSE:MDC)?

At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 19 hedge funds with a bullish position in MDC at the beginning of this year. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

MDC_dec2018

When looking at the institutional investors followed by Insider Monkey, Brian Ashford-Russell and Tim Woolley’s Polar Capital has the largest position in M.D.C. Holdings, Inc. (NYSE:MDC), worth close to $28 million, corresponding to 0.2% of its total 13F portfolio. Coming in second is Chuck Royce of Royce & Associates, with a $15.7 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining professional money managers with similar optimism encompass Steve Leonard’s Pacifica Capital Investments, Eduardo Abush’s Waterfront Capital Partners and Ken Fisher’s Fisher Asset Management.

Due to the fact that M.D.C. Holdings, Inc. (NYSE:MDC) has faced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there exists a select few money managers who sold off their entire stakes last quarter. Intriguingly, Matthew Hulsizer’s PEAK6 Capital Management cut the largest position of all the hedgies watched by Insider Monkey, valued at an estimated $0.2 million in stock. Andrew Feldstein and Stephen Siderow’s fund, Blue Mountain Capital, also cut its stock, about $0 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as M.D.C. Holdings, Inc. (NYSE:MDC) but similarly valued. We will take a look at Meritor Inc (NYSE:MTOR), Mueller Industries, Inc. (NYSE:MLI), Solid Biosciences Inc. (NASDAQ:SLDB), and Tupperware Brands Corporation (NYSE:TUP). This group of stocks’ market caps match MDC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MTOR 24 321562 5
MLI 15 201000 7
SLDB 17 463252 -2
TUP 22 175963 2
Average 19.5 290444 3

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $290 million. That figure was $80 million in MDC’s case. Meritor Inc (NYSE:MTOR) is the most popular stock in this table. On the other hand Mueller Industries, Inc. (NYSE:MLI) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks M.D.C. Holdings, Inc. (NYSE:MDC) is even less popular than MLI. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

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

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