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Taylor Morrison Home Corp (TMHC): Hedge Fund Sentiment Unchanged

We at Insider Monkey have gone over 700 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article we look at what those investors think of Taylor Morrison Home Corp (NYSE:TMHC).

Hedge fund interest in Taylor Morrison Home Corp (NYSE:TMHC) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as TopBuild Corp (NYSE:BLD), Advanced Energy Industries, Inc. (NASDAQ:AEIS), and Evoqua Water Technologies Corp. (NYSE:AQUA) to gather more data points.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

D. E. Shaw

Let’s review the new hedge fund action surrounding Taylor Morrison Home Corp (NYSE:TMHC).

How have hedgies been trading Taylor Morrison Home Corp (NYSE:TMHC)?

At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, representing no change from the previous quarter. The graph below displays the number of hedge funds with bullish position in TMHC over the last 13 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).

TMHC_dec2018

According to Insider Monkey’s hedge fund database, John Khoury’s Long Pond Capital has the biggest position in Taylor Morrison Home Corp (NYSE:TMHC), worth close to $99.3 million, accounting for 2.6% of its total 13F portfolio. The second largest stake is held by Millennium Management, led by Israel Englander, holding a $94 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions consist of Edgar Wachenheim’s Greenhaven Associates, Brian Ashford-Russell and Tim Woolley’s Polar Capital and D. E. Shaw’s D E Shaw.

Judging by the fact that Taylor Morrison Home Corp (NYSE:TMHC) has faced falling interest from hedge fund managers, we can see that there exists a select few hedgies that slashed their positions entirely last quarter. It’s worth mentioning that Leon Cooperman’s Omega Advisors cut the largest position of the 700 funds watched by Insider Monkey, valued at an estimated $15.6 million in stock. Glenn Russell Dubin’s fund, Highbridge Capital Management, also said goodbye to its stock, about $1.6 million worth. These transactions are important to note, as total 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 Taylor Morrison Home Corp (NYSE:TMHC) but similarly valued. We will take a look at TopBuild Corp (NYSE:BLD), Advanced Energy Industries, Inc. (NASDAQ:AEIS), Evoqua Water Technologies Corp. (NYSE:AQUA), and Independent Bank Group Inc (NASDAQ:IBTX). This group of stocks’ market values match TMHC’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BLD 18 142394 5
AEIS 19 191790 0
AQUA 11 42787 -1
IBTX 11 119938 1
Average 14.75 124227 1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $124 million. That figure was $399 million in TMHC’s case. Advanced Energy Industries, Inc. (NASDAQ:AEIS) is the most popular stock in this table. On the other hand Evoqua Water Technologies Corp. (NYSE:AQUA) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Taylor Morrison Home Corp (NYSE:TMHC) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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

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