Heartland Advisors, an investment management company, released its “Heartland Value Fund” second quarter 2024 investor letter. A copy of the letter can be downloaded here. The fund was down 3.21% during the quarter compared to the Russell 2000 Value Index’s 3.64% loss. Stock selection was mixed during the period. In addition, you can check the top 5 holdings of the fund to know its best picks in 2024.
Heartland Value Fund highlighted stocks like Century Communities, Inc. (NYSE:CCS) in the Q2 2024 investor letter. Headquartered in Greenwood Village, Colorado, Century Communities, Inc. (NYSE:CCS) is a home builder. The one-month return of Century Communities, Inc. (NYSE:CCS) was 9.72%, and its shares gained 16.41% of their value over the last 52 weeks. On July 12, 2024, Century Communities, Inc. (NYSE:CCS) stock closed at $90.50 per share with a market capitalization of $2.877 billion.
Heartland Value Fund stated the following regarding Century Communities, Inc. (NYSE:CCS) in its Q2 2024 investor letter:
“In this volatile market, we also understand that promising long-term opportunities may already reside in our portfolio; our job is to have the discipline to stick with them, even amid short-term challenges. An example of this is Century Communities, Inc. (NYSE:CCS), a homebuilder based in Denver.
The stock slumped more than 15% in the second quarter along with other homebuilders as mortgage rates rose. While weakness in real estate could persist for the next few quarters, this is a case where the story is about the future. Simply put, there is a massive shortage of homes in America after building rates fell below the 50-year average following the global financial crisis. Since 2012, 7.2 million more households have been formed than single-family homes constructed.
As the median sales price on new homes sold rose to $433,500 in April, housing affordability sank to record lows, putting a strain on the lower end of the market just as millennials are forming new households. Less than 52% of millennials currently own homes, compared with 78% for Baby Boomers and 70% for Gen X. This is creating an attractive supply-demand dynamic for CCS, as approximately 94% of the homebuilder’s sales are made to entry-level buyers.
We believe Century’s management team, which has guided the company to more than 20 consecutive years of profitability, should be able to navigate the housing slowdown while taking advantage of this gap. Yet the stock trades at just under 1X book value versus 1.7X book for homebuilders and 4.3X for the S&P 500.”
A construction site with new single-family homes framing the horizon.
Century Communities, Inc. (NYSE:CCS) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 26 hedge fund portfolios held Century Communities, Inc. (NYSE:CCS) at the end of the first quarter which was 23 in the previous quarter. The first quarter revenue of Century Communities, Inc. (NYSE:CCS) was $949 million, up 26% from Q1 2023. While we acknowledge the potential of Century Communities, Inc. (NYSE:CCS) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed Century Communities, Inc. (NYSE:CCS) and shared Next Century Growth Investors’ views on the company in Q4 2023. In addition, please check out our hedge fund investor letters Q2 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
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