Should You Consider Investing in Lennar Corporation (LEN)?

·3 min read

Third Avenue Management, an investment management firm, published its “Real Estate Value Fund” first quarter 2021 investor letter – a copy of which can be downloaded here. A return of +10.70% was recorded by the fund for the Q1 of 2021, outperforming the benchmark, FTSE EPRA NAREIT Developed Index, that rose to +6.11% for the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Third Avenue Management, in its Real Estate Value Fund Q1 2021 investor letter, mentioned Lennar Corporation (NYSE: LEN), and shared their insights on the company. Lennar Corporation is a Miami, Florida-based home construction company that currently has a $31.5 billion market capitalization. Since the beginning of the year, LEN delivered a 35.71% return, extending its 12-month gains to 103.32%. As of May 11, 2021, the stock closed at $103.45 per share.

Here is what Third Avenue Management has to say about Lennar Corporation in its Q1 2021 investor letter:

"Lennar Corp. (the leading homebuilder in North America, which also has substantial interests in related businesses such as multi-family development, “PropTech” ventures, land development, and financial services) announcing that it anticipated spinning-off a number of its ancillary businesses into a separate publicly-traded company later this year. Through this transaction, Lennar’s forward thinking management team (headed by Executive Chairman Stuart Miller) would surface an estimated $3-5 billion of asset value that is not currently generating substantial profits by placing the related business lines into a new entity (or $10-16 per share of value). Moreover, this transaction is not expected to compromise the earnings from its incredibly-efficient homebuilding operations, which generated more than $8 per share of profits in the most recent 12 month period (implying more than $96 per share at a 12 times multiple) while selling more than 52,000 homes during the year (or roughly one home every 10 minutes)."

Pixabay/ Public Domain

Our calculations show that Lennar Corporation (NYSE: LEN) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Lennar Corporation was in 52 hedge fund portfolios, compared to 60 funds in the third quarter. LEN delivered an 11.25% return in the past 3 months.

The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 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. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

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

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