NEW YORK (CNN/Money) - Worried that the housing boom could go bust, veteran fund manager Ken Heebner has dumped his large positions in home-building stocks.

Heebner, the co-founder of Capital Growth Management, said in a recent interview with Money magazine that in the first quarter he sold all of the home-building stocks in CGM's four mutual funds: CGM Capital Development (LOMCX), CGM Focus (CGMFX), CGM Mutual (LOMMX), and CGM Realty (CGMRX). Heebner had long been a fan of the group.

"I am concerned about speculation at the high-end of the [real estate] market," said Heebner. If home prices were to fall, worries Heebner, real estate activity would slow, including home building.

The biggest portfolio shift was in CGM Realty, in which Heebner had invested 63 percent of the fund's assets in the companies that build single-family homes or condominiums. The fund's three largest positions were in Hovnanian Enterprises (Research), Toll Brothers (Research) and DR Horton (Research). In his other funds, Heebner had slowly started exiting the sector last year.

Home-building stocks are up 18 percent in 2005, as consumers continue to snap up houses at ever higher prices. "I probably didn't time it right," said Heebner.

For the Realty fund, Heebner said he is now buying shares of commercial, mall and office real estate investment trusts. Heebner thinks the economy is improving, and that those REITs should be able to command higher rents as demand for office and retail space improves.

"The economy's cyclical upturn will be good for those REITs," he says.

The fund also owns shares in hotel REITs as well as casino company Las Vegas Sands (Research) and real estate brokerage CB Richard Ellis (Research).

Heebner has a history of making bold and swift sector calls. Often they turn out right. Heebner began buying homebuilding stocks in early 2001. Over the next four years, home-building stocks rose, on average, 229 percent. The Standard & Poor's 500 stock index fell 8.2 percent during the same time period.

That prescient call and others have boosted the performance of CGM, which manages $4.5 billion in assets in its four funds and private accounts.

CGM Realty Fund has risen an annualized 27 percent a year for the past five years, outperforming 98 percent of all other real estate funds, according to Morningstar. The fund is down slightly this year.

Heebner hasn't necessarily lost his touch, however. CGM Focus rose nearly 11 percent in the first quarter -- it was the best performing diversified U.S. stock fund during that period.

More real estate strategies

Forecast for 100 major markets