Millrose Stock Has Jumped 44% Since Debut But One Fund Still Sold 2.5 Million Shares

New York City-based Brave Warrior Advisors reduced its stake in Millrose Properties (NYSE:MRP) by nearly 2.5 million shares in the third quarter, a move that contributed an estimated $43.5 million position change from quarter to quarter.

What Happened

According to a Securities and Exchange Commission (SEC) filing dated November 14, Brave Warrior Advisors sold a portion of its position in Millrose Properties during the third quarter, with the change in position value totaling approximately $43.5 million.

What Else to Know

Brave Warrior Advisors' move reduced its position in Millrose Properties to 4.2% of reportable AUM as of September 30.

Top holdings after the filing:

• NYSE: ELV: $592.6 million (13.8% of AUM)
• NYSE: SNX: $536.3 million (12.5% of AUM)
• NYSE: OMF: $440.1 million (10.2% of AUM)
• NASDAQ: SLM: $322.7 million (7.5% of AUM)
• NYSE: AN: $265.6 million (6.2% of AUM)

As of Tuesday, Millrose Properties shares were priced at $31, up 44% since their public-market debut in February.

Company Overview

Company Snapshot

• Millrose Properties operates a Homesite Option Purchase Platform (HOPP'R) that facilitates residential land banking and provides homebuilders with access to controlled land positions.
• The company’s business model centers on enabling capital-light expansion for homebuilders through land option contracts and related real estate services.
• Its primary customers are institutional and large-scale homebuilders seeking efficient solutions for residential land acquisition and development.

Millrose Properties is a publicly traded residential real estate investment trust (REIT) specializing in land option platforms for homebuilders. The company leverages its HOPP'R model to enable capital-light expansion for builders while providing investors with access to income-generating residential real estate opportunities.

Foolish Take

Millrose continues to post rapid balance-sheet expansion and rising cash generation, but its shares have rallied since the IPO and now reflect a more complex mix of growth, leverage and execution risk. With that in mind, Brave Warrior’s decision to reduce its exposure suggests a recalibration rather than an abandonment of the thesis, especially as the fund maintains a still-sizable stake.

Millrose’s latest quarter showed why institutional investors are engaged. The company generated $852 million in net cash proceeds from homesite sales, including $766 million from home construction company Lennar, and it redeployed $858 million back into land acquisition and development with Lennar. Revenue, meanwhile, reached $179.3 million, and AFFO was $122.5 million, or $0.74 per share, supported by high option-fee income and an expanding portfolio that now includes approximately 139,000 homesites across 30 states. Liquidity totaled $1.6 billion at quarter-end, strengthened by $2 billion in newly issued senior notes.

For long-term investors, Millrose offers a scalable, capital-light model with recurring economics, but leverage, a dependence on counterparti,es and the pace of redeployment remain key risks to monitor.

Glossary

Assets Under Management (AUM): The total market value of investments managed by a fund or investment firm.

13F: A quarterly report filed by institutional investment managers to disclose their equity holdings.

Dividend Yield: Annual dividends paid by a company divided by its current share price, shown as a percentage.

Trailing Twelve Months (TTM): The 12-month period ending with the most recent quarterly report.

Alpha: A measure of an investment's performance compared to a benchmark, indicating outperformance or underperformance.

REIT (Real Estate Investment Trust): A company that owns, operates, or finances income-producing real estate and distributes most income to shareholders.

Land Banking: The practice of acquiring and holding land for future development or sale.

Capital-Light: A business model that requires minimal investment in physical assets to grow operations.

Homesite Option Purchase Platform (HOPP'R): A platform enabling homebuilders to secure land through options rather than outright purchase.

Position: The amount of a particular security or asset owned by an investor or fund.

SLM is an advertising partner of Motley Fool Money. Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.