Big Hedge Funds are Moving Cash into Housing... Really??
Down)
Is housing back?
According to reports from the WSJ Thursday, the sector very well might be -- at least in the eyes of several major hedge fund managers.
SAC Capital Advisors, Caxton Associates, Avenue Capital, and Blackstone Group are each rumored to have taken large stakes in housing-related investments. Likewise, the sector has gotten recent blessings from once-bearish research firm Zelman & Associates as well as Goldman Sachs.
Blackstone's GSO Capital is said to have taken a stake in builders like Beazer Homes (NYSE: BZH) and Pulte Group (NYSE: PHM), along with some housing debt. One analyst at GSO said the firm believes housing is at a turning point, not just because of affordability and improving demographics, but because the market is more in balance with markedly improved inventory levels.
Other's point to pent-up demand from younger buyers. With many young folks either out of college or forced to move back in with parents for one reason or another, record low mortgage rates and better affordability are sparking some interest. Should both factors hold into 2012, it could prove for a nice rebound in the market.
One Dow Jones index which tracks performance of a select group of homebuilders is up 30 percent since the end of the third quarter, easily outpacing the 10.5 percent gain in the S&P 500 over the same period. The last time homebuilder's outperformed broader markets by such a wide margin was in the third quarter of 2008. Elsewhere, the iShares Dow Jones US Real Estate ETF (NYSE: IYR) is up 15 percent since the end of last quarter (though if you count the close in the mid-$47 range one day later, the gain is closer to 20 percent).
Economic data has also supported the view of a recovery, even if just slightly. Last week the National Association of Realtors said existing home sales rose 4 percent in November, while existing home inventories fell 5.8 percent to 2.58 million, the lowest the metric has been since May 2005. And new data Thursday shows pending home sales increased 7.3 percent, far above the 1.5 percent pop expected by economists.
But should the party start just yet? New York Fed President William Dudley said while homes no longer appear overvalued, it would be silly to assume the market has bottomed. Also, hedge fund T2 Partners, run by Whitney Tilson, remains bearish on housing.
Whether the phrase "home is where the heart is" holds true, it appears another phrase could be re-emerging: "home is where profits are."
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According to reports from the WSJ Thursday, the sector very well might be -- at least in the eyes of several major hedge fund managers.
SAC Capital Advisors, Caxton Associates, Avenue Capital, and Blackstone Group are each rumored to have taken large stakes in housing-related investments. Likewise, the sector has gotten recent blessings from once-bearish research firm Zelman & Associates as well as Goldman Sachs.
Blackstone's GSO Capital is said to have taken a stake in builders like Beazer Homes (NYSE: BZH) and Pulte Group (NYSE: PHM), along with some housing debt. One analyst at GSO said the firm believes housing is at a turning point, not just because of affordability and improving demographics, but because the market is more in balance with markedly improved inventory levels.
Other's point to pent-up demand from younger buyers. With many young folks either out of college or forced to move back in with parents for one reason or another, record low mortgage rates and better affordability are sparking some interest. Should both factors hold into 2012, it could prove for a nice rebound in the market.
One Dow Jones index which tracks performance of a select group of homebuilders is up 30 percent since the end of the third quarter, easily outpacing the 10.5 percent gain in the S&P 500 over the same period. The last time homebuilder's outperformed broader markets by such a wide margin was in the third quarter of 2008. Elsewhere, the iShares Dow Jones US Real Estate ETF (NYSE: IYR) is up 15 percent since the end of last quarter (though if you count the close in the mid-$47 range one day later, the gain is closer to 20 percent).
Economic data has also supported the view of a recovery, even if just slightly. Last week the National Association of Realtors said existing home sales rose 4 percent in November, while existing home inventories fell 5.8 percent to 2.58 million, the lowest the metric has been since May 2005. And new data Thursday shows pending home sales increased 7.3 percent, far above the 1.5 percent pop expected by economists.
But should the party start just yet? New York Fed President William Dudley said while homes no longer appear overvalued, it would be silly to assume the market has bottomed. Also, hedge fund T2 Partners, run by Whitney Tilson, remains bearish on housing.
Whether the phrase "home is where the heart is" holds true, it appears another phrase could be re-emerging: "home is where profits are."
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SAC Capital, Existing-Home Sales, Caxton Associates, Steven A. Cohen, Pending Home Sales, Standard & Poor's, Avenue Capital Management, Hedge Funds, Life, Style and Real Estate, Whitney Tilson, T2 PartnersSign up for StreetInsider Free!
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