Fund Investors Move Into, And Out Of, Home Depot

| About: Home Depot, (HD)

Home Depot (NYSE:HD) shares are down about 4% year-to-date, about even with the S&P 500 and significantly beating competitor Lowe’s (NYSE:LOW), which is down nearly 20%. At today’s price, Home Depot seems reasonable with a slightly above-market-average P/E of 15 and a dividend yield of 2.9%. Considering the 10-year yield from government bonds is at 2.3%, Home Depot should be a better bet.

The Q2 13F filings came out a few weeks ago, and they give us insight into what large investors are doing with Home Depot’s stock. During that period shares fell 2.3%. That prompted some value-oriented hedge fund and mutual fund managers to enter the stock. At the same time, two longer-term investors sold shares.

Jean-Marie Eveillard runs First Eagle Funds, a mutual fund company, and has significantly beaten the overall markets over a long-term period. He is a bottom-up, fundamental, value investor. He has owned Home Depot for many, many years and increased his position in the second quarter. The stock currently makes up 1.7% of his portfolio and is his 14th largest position. Eveillard owns slightly more than 10 million shares and increased his holdings by about 10% in Q2.

Another talented value investor who bought shares was Andreas Halvorsen. He initiated a position in Home Depot in the second quarter by buying 2.6 million shares. Halvorsen runs hedge fund Viking Global Investors. He previously had worked under Julian Robertson at Tiger Management. Halvorsen runs a fairly focused portfolio. His largest position, Invesco (NYSE:IVZ), makes up 6% of his portfolio. His Home Depot position only constituted 0.8% of his portfolio in comparison.

Like Halvorsen, Bruce Kovner also initiated a position in Home Depot last quarter. I should say that he re-initiated a position, since he had previously owned the stock. Kovner runs Caxton Associates, a hedge fund with more than $3 billion under management. Unlike Halvorsen, Kovner holds more than 1,000 stocks at any given time. That puts his 0.23% position in Home Depot in perspective. All of his holdings except two make up less than 0.8% of his portfolio. The two exceptions? Citigroup (NYSE:C) and Vivus (NASDAQ:VVUS).

Not everyone was a buyer in Q2. Ron Baron had held Home Depot shares for nearly five years before completely closing his position last quarter. That holding period isn’t out of the ordinary for Baron; five years is his average. Baron was on CNBC recently saying that the stock market may be setting up for “an epic run.” He noted that S&P 500 earnings have doubled in the last decade, but their stocks have gone nowhere.

James Barrow was another seller of Home Depot in Q2. Barrow is a mutual fund manager who has about $50 billion under management in his mutual funds and private accounts. His long-term record has beaten the S&P 500 by a wide margin. Barrow trimmed his Home Depot position by 35% last quarter. He still holds about 3.5 million shares. The stock now makes up less than 0.3% of his portfolio.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.