Surprising Results Boosted D.R. Horton (DHI) in Q3

Meridian Funds, managed by ArrowMark Partners, released its “Meridian Hedged Equity Fund” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the quarter, the market is more focused on the tailwind of policy easing than the headwind of weakening fundamentals, resulting in substantial gains despite stagflation emerging as a key concern. In this environment, the fund returned 1.67% (net) during the quarter, compared to 8.13% returns of the S&P 500 Index and 3.53% returns of the secondary benchmark, the CBOE S&P 500 BuyWrite Index. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its third-quarter 2025 investor letter, Meridian Hedged Equity Fund highlighted stocks such as D.R. Horton, Inc. (NYSE:DHI). D.R. Horton, Inc. (NYSE:DHI) is a homebuilding company. The one-month return of D.R. Horton, Inc. (NYSE:DHI) was -6.51%, and its shares gained 2.42% of their value over the last 52 weeks. On December 23, 2025, D.R. Horton, Inc. (NYSE:DHI) stock closed at $144.47 per share, with a market capitalization of $42.194 billion.

Meridian Hedged Equity Fund stated the following regarding D.R. Horton, Inc. (NYSE:DHI) in its third quarter 2025 investor letter:

"D.R. Horton, Inc. (NYSE:DHI) is the largest homebuilder in the United States by volume, with a strategic focus on the entry-level and first-time buyer segments. Our investment thesis centers on the company's ability to leverage its unmatched scale and production-oriented model to deliver affordable homes, a compelling value proposition in a market challenged by affordability. Its extensive presence across numerous high-growth Sunbelt markets solidifies its leadership position. The company’s operational efficiency drives strong cash flow generation, enabling significant capital returns to shareholders through buybacks while maintaining a 'land-light' strategy that reduces balance sheet risk. The stock outperformed during the quarter after the company reported surprising results across several metrics, including stronger-than-expected home closings and new orders (flat versus an expected decline), resilient gross margins that beat prior guidance, and a 2% year-over year decline in construction costs. Management also raised share repurchase guidance, signaling confidence in future cash flows."

D.R. Horton, Inc. (NYSE:DHI) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 61 hedge fund portfolios held D.R. Horton, Inc. (NYSE:DHI) at the end of the third quarter, which was 64 in the previous quarter. While we acknowledge the potential of D.R. Horton, Inc. (NYSE:DHI) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered D.R. Horton, Inc. (NYSE:DHI) and shared Parnassus Value Equity Fund's views on the company. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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