Why Taylor Morrison Home (TMHC) Stock is a Compelling Investment Case

Miller Value Partners recently released its Q2 2020 Investor Letter, a copy of which you can download here. During the second quarter, Deep Value Strategy led the overall marketplace and S&P 1500 Value index, generating returns in excess of 50%. You should check out Miller Value Partners’ top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash.

In the said letter, Miller Value highlighted a few stocks and Taylor Morrison Home Corp (NYSE:TMHC) is one of them. Taylor Morrison Home Corp (NYSE:TMHC) is a home building company. Year-to-date, Taylor Morrison Home Corp (NYSE:TMHC) stock gained 10.8% and on August 13th it had a closing price of $24.39. Here is what Miller Value said:

“Late in 2019, Taylor Morrison announced plans to purchase our holding William Lyon Homes at an attractive price of one times book value. We maintained our investment in the combined entity, given our belief that Taylor Morrison has a strong management team and will have a strong presence in the faster growing southeastern and southwestern parts of the United States. The combination also has nearly 80% of their portfolio in Entry Level and 1st Move-up homes, which should be a beneficiary of lower interest rates and strong supply/demand trends. Becoming a top 5 national builder, Taylor Morrison should also benefit from significant scale, synergy savings and growing free cash flow generation. Shortly after the William Lyons deal closed, the company stock price came under significant pressure, along with other homebuilders, on market fears of a housing downturn. The homebuilding underlying industry fundamentals remain strong, and historically, the industry has been one of the first to recover from a downturn. Taylor Morrison’s share price fell below $10/share, a very attractive valuation at 60% discount to tangible book value. We significantly increased our holdings during this time period. Over the next couple of years, Taylor Morrison should see strong margin expansion, return on equity improving towards 15%+, supporting a normalized EPS greater than $4/share. We believe the investment is a very attractive reward/risk opportunity with the potential for the share price to still double from current levels.”

This isn’t the first time Miller Value talked about Taylor Morrison Home Corp (NYSE:TMHC) favorably either. The investment firm has been a long time Taylor Morrison Home Corp (NYSE:TMHC) bull. In June, we shared Miller Value’s bullish Taylor Morrison Home Corp (NYSE:TMHC) thesis in this article.

In Q1 2020, the number of bullish hedge fund positions on Taylor Morrison Home Corp (NYSE:TMHC) stock remained unchanged from the previous quarter (see the chart here). Our calculations showed that Taylor Morrison Home Corp (NYSE:TMHC) 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. Cannabis stocks are roaring back in 2020, so we are checking out this under-the-radar stock. We go through lists like the 10 most profitable companies in America 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. 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.