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Hey, it's Garrett. |
While traders were piling into bloated AI stocks this summer, I was quietly tracking something else entirely: where billionaires were actually putting their money. |
The result? |
A 41% winner on XHB (housing ETF) from $85 to $120 over the past few months. Not flashy. Not trendy. Just following the breadcrumbs that institutional money leaves behind. |
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Here's exactly how I do it—and why there are still opportunities sitting right in front of you. |
The 13F Gold Mine Everyone Ignores |
A few months back, I spent an entire week diving deep into 13F filings—quarterly reports that big investors must file showing their stock positions. |
Yeah, I know, sounds about as exciting as watching paint dry. |
But here's what caught my attention: while everyone was obsessing over AI plays, the smart money was quietly loading up on housing stocks. |
The filings told a clear story. These aren't real-time—there's a 45-day delay, which most people see as a weakness. |
I see it as signal filtering. By the time institutions file, they're not chasing momentum. They're positioning for what they see coming 6-12 months out. |
And what they saw was obvious: rate cuts were inevitable, and housing would be the primary beneficiary. |
The System That Found the Trade |
My screening process is straightforward but most people won't do the work: |
Quality Filter: Companies with strong financials using the F-Score system—a 9-point checklist measuring things like profitability and debt management. I want scores of 7 or higher, meaning the business is genuinely healthy. |
Value Filter: Stocks trading below their intrinsic value using Graham Score metrics (inspired by Warren Buffett's mentor). A score of 0.8 or lower means the company is likely undervalued by the market. |
Momentum Trigger: Breaking above the 20-day moving average—a trend line that smooths out recent price action. This ensures I'm not buying into a downtrend. |
Liquidity Floor: $500M market cap minimum so I can actually get in and out without moving the stock price. |
When I ran this screen back in June, housing names kept appearing. That's when I started digging into those 13F filings and found institutions weren't just buying—they were loading up. |
What the Smart Money Saw Coming |
The institutions weren't just betting on rate cuts. They were positioning for a specific type of economic environment: |
Private sector credit markets were already seizing up. Banks didn't want to hold risk anymore—they were originating loans just to pass them off to private equity. |
Very European in nature. When nobody wants to take risk, you get accommodation. |
The Fed was clearly behind the curve. By the time cuts came, they'd be playing catch-up to economic reality. |
Housing stocks would benefit first and most directly from this accommodation cycle. |
The Current Opportunity |
Here's where it gets interesting: the system is showing me two housing names that still have room to run. |
Taylor Morrison (TMHC): $7 billion company with an F-Score of 8.5 (excellent financial health) and Graham Score at 0.68 (signaling another 10-15% upside potential). Currently trading around $69. |
TriPoint Homes (TPH): $3.25 billion company with similar quality metrics, trading at $37 with potential to reach $45. |
Both show strong fundamentals: their EV/EBITDA ratios (what you're paying versus actual cash earnings) sit under 8, which signals cheapness in today's market. Price-to-cash flow ratios around 8.25 are reasonable, especially with potential consolidation coming in 2026. |
Why This Works When Other Systems Fail |
Most traders chase what's moving today. Institutions position for what's moving tomorrow. |
The 13F system forces you to think like capital allocators, not day traders. These people aren't trying to flip stocks in a week. They're identifying structural shifts months in advance. |
The beauty is the lag time. By the time retail notices institutional positioning, you've already had 2-3 months to position alongside them at better prices. |
What to Watch Next Week |
CPI comes out Wednesday. |
If we get a weak print, expect that 50 basis point cut probability to jump from 10% to 20-25%. Housing stocks will likely see another leg up. |
But remember: institutional money already positioned for this outcome months ago. They're not waiting for the data to confirm what they already know. |
The 13F system isn't about timing markets perfectly. It's about identifying where the smart money is positioning and getting there before the crowd notices. |
Sometimes the best trades are hiding in plain sight—in SEC filings that most people are too lazy to read. |
I'll be live with you tomorrow at 8:45 AM ET. |
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Stay Positive, |
Garrett Baldwin |
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