Is Quanex Building Products Corporation (NX) Going to Burn These Hedge Funds?

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Quanex Building Products Corporation (NYSE:NX) was in 11 hedge funds’ portfolio at the end of the first quarter of 2013. NX investors should pay attention to a decrease in hedge fund interest of late. There were 12 hedge funds in our database with NX positions at the end of the previous quarter.

Quanex Building Products Corporation (NYSE:NX)

In the eyes of most stock holders, hedge funds are viewed as unimportant, old investment tools of years past. While there are more than 8000 funds with their doors open today, we at Insider Monkey hone in on the aristocrats of this club, close to 450 funds. Most estimates calculate that this group has its hands on most of all hedge funds’ total asset base, and by monitoring their top picks, we have uncovered a few investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Just as beneficial, positive insider trading activity is a second way to break down the world of equities. There are many motivations for an executive to cut shares of his or her company, but only one, very simple reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the impressive potential of this strategy if piggybackers know where to look (learn more here).

Now, let’s take a look at the latest action encompassing Quanex Building Products Corporation (NYSE:NX).

How are hedge funds trading Quanex Building Products Corporation (NYSE:NX)?

In preparation for this quarter, a total of 11 of the hedge funds we track were long in this stock, a change of -8% from the previous quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their holdings substantially.

When looking at the hedgies we track, Royce & Associates, managed by Chuck Royce, holds the biggest position in Quanex Building Products Corporation (NYSE:NX). Royce & Associates has a $45.9 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Odey Asset Management Group, managed by Crispin Odey, which held a $32.8 million position; the fund has 1.1% of its 13F portfolio invested in the stock. Some other hedge funds that are bullish include D. E. Shaw’s D E Shaw, Ken Griffin’s Citadel Investment Group and Michael Price’s MFP Investors.

Because Quanex Building Products Corporation (NYSE:NX) has experienced bearish sentiment from the entirety of the hedge funds we track, we can see that there was a specific group of money managers who were dropping their positions entirely at the end of the first quarter. It’s worth mentioning that Jeffrey Gates’s Gates Capital Management cut the biggest stake of the “upper crust” of funds we watch, worth an estimated $22.2 million in stock., and Phill Gross and Robert Atchinson of Adage Capital Management was right behind this move, as the fund cut about $17.8 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 1 funds at the end of the first quarter.

How have insiders been trading Quanex Building Products Corporation (NYSE:NX)?

Bullish insider trading is particularly usable when the company in focus has experienced transactions within the past six months. Over the latest 180-day time frame, Quanex Building Products Corporation (NYSE:NX) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Quanex Building Products Corporation (NYSE:NX). These stocks are Apogee Enterprises, Inc. (NASDAQ:APOG), Headwaters Inc (NYSE:HW), Universal Forest Products, Inc. (NASDAQ:UFPI), Griffon Corporation (NYSE:GFF), and AAON, Inc. (NASDAQ:AAON). This group of stocks are the members of the general building materials industry and their market caps are closest to NX’s market cap.

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