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Is Builders FirstSource, Inc. (BLDR) Going to Burn These Hedge Funds?

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Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.

Builders FirstSource, Inc. (NASDAQ:BLDR) investors should be aware of an increase in the hedge fund interest of late. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article, we will examine companies such as Kaiser Aluminum Corp. (NASDAQ:KALU), Homeinns Hotel Group (ADR) (NASDAQ:HMIN), and AMAG Pharmaceuticals, Inc. (NASDAQ:AMAG) to gather more data points.

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In the 21st century investor’s toolkit there are numerous formulas market participants can use to grade stocks. A pair of the less utilized formulas are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the elite hedge fund managers can outperform the market by a very impressive margin (see the details here).

Keeping this in mind, let’s take a look at the fresh action regarding Builders FirstSource, Inc. (NASDAQ:BLDR).

How have hedgies been trading Builders FirstSource, Inc. (NASDAQ:BLDR)?

Heading into Q4, a total of 39 of the hedge funds tracked by Insider Monkey were long this stock, an increase of 56% from the second quarter. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Richard Barrera’s Roystone Capital Partners has the biggest position in Builders FirstSource, Inc. (NASDAQ:BLDR), worth close to $46.9 million, comprising 2.2% of its total 13F portfolio. Sitting at the No. 2 spot is Stadium Capital Management, managed by Alexander Medina Seaver, which holds a $45.6 million position; the fund has 16.7% of its 13F portfolio invested in the stock. Some other professional money managers that hold long positions comprise Lee Munder’s Lee Munder Capital Group, William C. Martin’s Raging Capital Management, and Ed Bosek’s BeaconLight Capital.

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