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NCI Building Systems, Inc. (NCS): Are Hedge Funds Right About This Stock?

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Is it smart to be bullish on NCI Building Systems, Inc. (NYSE:NCS)?

In today’s marketplace, there are tons of indicators investors can use to track the equity markets. A pair of the best are hedge fund and insider trading activity. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the top money managers can beat the market by a significant margin (see just how much).

Just as crucial, bullish insider trading sentiment is another way to analyze the financial markets. Obviously, there are a variety of reasons for a corporate insider to sell shares of his or her company, but just one, very simple reason why they would buy. Plenty of academic studies have demonstrated the useful potential of this tactic if “monkeys” understand where to look (learn more here).

Keeping this in mind, it’s important to discuss the recent info about NCI Building Systems, Inc. (NYSE:NCS).

How are hedge funds trading NCI Building Systems, Inc. (NYSE:NCS)?

In preparation for the third quarter, a total of 14 of the hedge funds we track held long positions in this stock, a change of 8% from the first quarter. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their holdings significantly.

NCI Building Systems, Inc. (NYSE:NCS)When using filings from the hedgies we track, Royce & Associates, managed by Chuck Royce, holds the most valuable position in NCI Building Systems, Inc. (NYSE:NCS). Royce & Associates has a $22.7 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by Renaissance Technologies, managed by Jim Simons, which held a $7.5 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining peers that hold long positions include Phil Frohlich’s Prescott Group Capital Management, D. E. Shaw’s D E Shaw and Richard S. Meisenberg’s ACK Asset Management.

As one would understandably expect, certain money managers have jumped into NCI Building Systems, Inc. (NYSE:NCS) headfirst. Royce & Associates, managed by Chuck Royce, created the biggest position in NCI Building Systems, Inc. (NYSE:NCS). Royce & Associates had 22.7 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also made a $7.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Phil Frohlich’s Prescott Group Capital Management, D. E. Shaw’s D E Shaw, and Richard S. Meisenberg’s ACK Asset Management.

How have insiders been trading NCI Building Systems, Inc. (NYSE:NCS)?

Insider buying is most useful when the company in question has experienced transactions within the past six months. Over the last half-year time frame, NCI Building Systems, Inc. (NYSE:NCS) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll also review the relationship between both of these indicators 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), U.S. Lime & Minerals Inc. (NASDAQ:USLM), and PGT, Inc. (NASDAQ:PGTI). All of these stocks are in the general building materials industry and their market caps are similar to NCS’s market cap.

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