Is it smart to be bullish on Meritage Homes Corp (NYSE:MTH)?
If you were to ask many of your peers, hedge funds are assumed to be useless, old investment vehicles of a period lost to current times. Although there are In excess of 8,000 hedge funds with their doors open in present day, this site looks at the elite of this club, about 525 funds. It is assumed that this group has its hands on the lion’s share of all hedge funds’ total assets, and by keeping an eye on their best investments, we’ve formulated a number of investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).
Equally as useful, bullish insider trading sentiment is another way to look at the marketplace. Obviously, there are many stimuli for an executive to drop shares of his or her company, but only one, very clear reason why they would behave bullishly. Plenty of empirical studies have demonstrated the useful potential of this strategy if investors understand what to do (learn more here).
Thus, it’s important to discuss the newest info about Meritage Homes Corp (NYSE:MTH).
How have hedgies been trading Meritage Homes Corp (NYSE:MTH)?
Heading into Q3, a total of 20 of the hedge funds we track were long in this stock, a change of 0% from the first quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their holdings meaningfully.
When using filings from the hedgies we track, Ken Griffin’s Citadel Investment Group had the largest position in Meritage Homes Corp (NYSE:MTH), worth close to $63.7 million, comprising 0.1% of its total 13F portfolio. Coming in second is Donald Chiboucis of Columbus Circle Investors, with a $23.8 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining hedge funds that hold long positions include Douglas Dillard Jr. and Raj D. Venkatesan’s Standard Pacific Capital, Ken Heebner’s Capital Growth Management and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital.
Judging by the fact that Meritage Homes Corp (NYSE:MTH) has experienced a fall in interest from the entirety of the hedge funds we track, it’s safe to say that there is a sect of hedgies that elected to cut their entire stakes heading into Q2. Intriguingly, Andrew Sandler’s Sandler Capital Management said goodbye to the largest investment of the “upper crust” of funds we monitor, comprising an estimated $15.9 million in stock. Drew Cupps’s fund, Cupps Capital Management, also dumped its stock, about $11.5 million worth. These transactions are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
How are insiders trading Meritage Homes Corp (NYSE:MTH)?
Bullish insider trading is at its handiest when the primary stock in question has seen transactions within the past 180 days. Over the last six-month time period, Meritage Homes Corp (NYSE:MTH) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We’ll also examine the relationship between both of these indicators in other stocks similar to Meritage Homes Corp (NYSE:MTH). These stocks are Gafisa SA (ADR) (NYSE:GFA), The Ryland Group, Inc. (NYSE:RYL), Standard Pacific Corp. (NYSE:SPF), KB Home (NYSE:KBH), and M.D.C. Holdings, Inc. (NYSE:MDC). This group of stocks are in the residential construction industry and their market caps resemble MTH’s market cap.