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Is NVR, Inc. (NVR) Going to Burn These Hedge Funds?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of NVR, Inc. (NYSE:NVR).

NVR, Inc. (NYSE:NVR) investors should pay attention to an increase in hedge fund interest in recent months. Our calculations also showed that NVR 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.

If you’d ask most stock holders, hedge funds are viewed as unimportant, outdated investment tools of years past. While there are more than 8000 funds trading at present, Our experts hone in on the upper echelon of this group, approximately 850 funds. Most estimates calculate that this group of people shepherd the majority of all hedge funds’ total capital, and by paying attention to their highest performing equity investments, Insider Monkey has deciphered many investment strategies that have historically exceeded Mr. Market. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Ken Heebner of Capital Growth Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s analyze the fresh hedge fund action encompassing NVR, Inc. (NYSE:NVR).

How have hedgies been trading NVR, Inc. (NYSE:NVR)?

Heading into the second quarter of 2020, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from one quarter earlier. On the other hand, there were a total of 25 hedge funds with a bullish position in NVR a year ago. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).

Among these funds, Diamond Hill Capital held the most valuable stake in NVR, Inc. (NYSE:NVR), which was worth $248.8 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $90.8 million worth of shares. Impala Asset Management, Renaissance Technologies, and Citadel Investment Group 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 Impala Asset Management allocated the biggest weight to NVR, Inc. (NYSE:NVR), around 10.4% of its 13F portfolio. Giverny Capital is also relatively very bullish on the stock, setting aside 4.54 percent of its 13F equity portfolio to NVR.

Now, some big names have jumped into NVR, Inc. (NYSE:NVR) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, initiated the most valuable position in NVR, Inc. (NYSE:NVR). Balyasny Asset Management had $17.3 million invested in the company at the end of the quarter. Richard Gerson and Navroz D. Udwadia’s Falcon Edge Capital also made a $15.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Ken Heebner’s Capital Growth Management, Daniel Lascano’s Lomas Capital Management, and Asad Rahman and Aman Kapadia’s Akaris Global Partners.

Let’s also examine hedge fund activity in other stocks similar to NVR, Inc. (NYSE:NVR). These stocks are Open Text Corporation (NASDAQ:OTEX), ArcelorMittal (NYSE:MT), Tradeweb Markets Inc. (NASDAQ:TW), and Cable One Inc (NYSE:CABO). All of these stocks’ market caps are similar to NVR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
OTEX 18 376098 4
MT 13 123110 -4
TW 30 355406 -6
CABO 23 674859 4
Average 21 382368 -0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $382 million. That figure was $745 million in NVR’s case. Tradeweb Markets Inc. (NASDAQ:TW) is the most popular stock in this table. On the other hand ArcelorMittal (NYSE:MT) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks NVR, Inc. (NYSE:NVR) 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 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on NVR as the stock returned 25.4% so far in Q2 (through the end of May) 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.

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