Published on 8 Nov 2021 on Insider Monkey via Yahoo Finance

Were Hedge Funds Right About D.R. Horton, Inc. (DHI)?

Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about D.R. Horton, Inc. (NYSE:DHI).

Is D.R. Horton, Inc. (NYSE:DHI) going to take off soon? The smart money was in a pessimistic mood. The number of bullish hedge fund positions fell by 5 recently. D.R. Horton, Inc. (NYSE:DHI) was in 45 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 66. Our calculations also showed that DHI isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 50 hedge funds in our database with DHI holdings at the end of March.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.