NCI Building Systems, Inc. (NYSE:NCS) investors should pay attention to a decrease in hedge fund interest in recent months.
To most stock holders, hedge funds are viewed as slow, outdated financial tools of the past. While there are over 8000 funds in operation at the moment, we at Insider Monkey look at the crème de la crème of this club, close to 450 funds. Most estimates calculate that this group controls the majority of the smart money’s total capital, and by monitoring their highest performing investments, we have determined a few investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 23.3 percentage points in 8 months (see the details here).
Just as key, bullish insider trading sentiment is a second way to break down the financial markets. Obviously, there are lots of reasons for an insider to drop shares of his or her company, but just one, very simple reason why they would initiate a purchase. Plenty of academic studies have demonstrated the useful potential of this tactic if shareholders understand what to do (learn more here).
With these “truths” under our belt, we’re going to take a look at the key action encompassing NCI Building Systems, Inc. (NYSE:NCS).
What does the smart money think about NCI Building Systems, Inc. (NYSE:NCS)?
In preparation for this quarter, a total of 13 of the hedge funds we track were bullish in this stock, a change of -13% from the previous quarter. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes substantially.
When looking at the hedgies we track, Chuck Royce’s Royce & Associates had the biggest position in NCI Building Systems, Inc. (NYSE:NCS), worth close to $22.8 million, accounting for 0.1% of its total 13F portfolio. The second largest stake is held by Renaissance Technologies, managed by Jim Simons, which held a $8.9 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other peers that hold long positions include Phil Frohlich’s Prescott Group Capital Management, Richard S. Meisenberg’s ACK Asset Management and D. E. Shaw’s D E Shaw.
Judging by the fact that NCI Building Systems, Inc. (NYSE:NCS) has witnessed a declination in interest from the entirety of the hedge funds we track, we can see that there was a specific group of hedge funds that slashed their positions entirely at the end of the first quarter. Interestingly, Doug Silverman and Alexander Klabin’s Senator Investment Group dropped the largest investment of the “upper crust” of funds we track, valued at close to $3.1 million in stock.. Philip Hempleman’s fund, Ardsley Partners, also said goodbye to its stock, about $1.1 million worth. These transactions are important to note, as total hedge fund interest dropped by 2 funds at the end of the first quarter.
How have insiders been trading NCI Building Systems, Inc. (NYSE:NCS)?
Insider buying is particularly usable when the company in question has seen transactions within the past half-year. Over the last six-month time period, NCI Building Systems, Inc. (NYSE:NCS) has seen zero unique insiders buying, and 6 insider sales (see the details of insider trades here).
Let’s check out hedge fund and insider activity in other stocks similar to NCI Building Systems, Inc. (NYSE:NCS). These stocks are US Concrete Inc (NASDAQ:USCR), AAON, Inc. (NASDAQ:AAON), Quanex Building Products Corporation (NYSE:NX), and PGT, Inc. (NASDAQ:PGTI). This group of stocks are the members of the general building materials industry and their market caps are closest to NCS’s market cap.