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Why NVR (NVR) Stock is a Compelling Investment Case

Ensemble Capital recently released its Q3 2020 Investor Letter, a copy of which you can download here. The fund posted a return of 11.60% for the third quarter, outperforming its benchmark, the S&P 500 Index which returned 8.93% in the same quarter. You should check out Ensemble Fund’s top 5 stock picks for investors to buy right now, which could be the biggest winners of this year.

In the said letter, Ensemble Capital highlighted a few stocks and NVR Inc (NYSE:NVR) is one of them. NVR Inc (NYSE:NVR) is a home construction company. Year-to-date, NVR Inc (NYSE:NVR) stock gained 16.3% and on October 9th it had a closing price of $4,399.01. Here is what Ensemble Capital said:

“NVR: A home builder that deploys an idiosyncratic strategy that avoids speculating on land prices and builds homes to order rather than putting up a development and then hoping they can sell all the houses, NVR is an extremely well-run company with a focus on building new homes in the Southeastern United States. We believe that the home building industry, scarred from the overbuilding mistakes they made during the housing bubble 15 years ago, have been very slow to build new homes in recent years. This low level of investment has now gone on too long and there is a shortage of homes available to buy in the US. With mortgage interest rates plummeting, and people being triggered to reconsider their housing situation due to the pandemic, orders for new homes have gone vertical causing NVR’s stock to rally 25% during the quarter.”

Pixabay/ Public Domain

In Q2 2020, the number of bullish hedge fund positions on NVR Inc (NYSE:NVR) stock increased by about 15% from the previous quarter (see the chart here), so a number of other hedge fund managers seem to agree with NVR’s growth potential. Our calculations showed that NVR Inc (NYSE:NVR) isn’t ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free enewsletter below to receive our stories in your inbox:

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