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NCI Building Systems, Inc. (NYSE:NCS): Insiders Are Dumping, Should You?

NCI Building Systems, Inc. (NYSE:NCS) was in 15 hedge funds’ portfolio at the end of December. NCS shareholders have witnessed an increase in enthusiasm from smart money of late. There were 9 hedge funds in our database with NCS positions at the end of the previous quarter.

NCI Building Systems, Inc. (NYSE:NCS)

At the moment, there are a multitude of metrics shareholders can use to watch their holdings. A duo of the best are hedge fund and insider trading movement. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the elite money managers can outpace the broader indices by a healthy amount (see just how much).

Equally as integral, bullish insider trading activity is a second way to break down the marketplace. Just as you’d expect, there are a variety of motivations for a bullish insider to cut shares of his or her company, but only one, very obvious reason why they would behave bullishly. Several academic studies have demonstrated the market-beating potential of this tactic if piggybackers understand what to do (learn more here).

With all of this in mind, it’s important to take a gander at the latest action regarding NCI Building Systems, Inc. (NYSE:NCS).

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

Heading into 2013, a total of 15 of the hedge funds we track were bullish in this stock, a change of 67% from one quarter earlier. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their stakes substantially.

When looking at the hedgies we track, Chuck Royce’s Royce & Associates had the most valuable position in NCI Building Systems, Inc. (NYSE:NCS), worth close to $20 million, accounting for 0.1% of its total 13F portfolio. On Royce & Associates’s heels is Prescott Group Capital Management, managed by Phil Frohlich, which held a $11 million position; the fund has 2.8% of its 13F portfolio invested in the stock. Remaining peers that are bullish include Jim Simons’s Renaissance Technologies, Richard S. Meisenberg’s ACK Asset Management and D. E. Shaw’s D E Shaw.

Now, specific money managers were breaking ground themselves. ACK Asset Management, managed by Richard S. Meisenberg, created the biggest position in NCI Building Systems, Inc. (NYSE:NCS). ACK Asset Management had 4 million invested in the company at the end of the quarter. Richard Driehaus’s Driehaus Capital also made a $3 million investment in the stock during the quarter. The other funds with new positions in the stock are Ken Griffin’s Citadel Investment Group, Neil Chriss’s Hutchin Hill Capital, and John Overdeck and David Siegel’s Two Sigma Advisors.

Insider trading activity in NCI Building Systems, Inc. (NYSE:NCS)

Insider trading activity, especially when it’s bullish, is at its handiest when the company in focus has seen transactions within the past half-year. Over the last 180-day time frame, NCI Building Systems, Inc. (NYSE:NCS) has seen zero unique insiders purchasing, and 6 insider sales (see the details of insider trades here).

With the returns demonstrated by our strategies, retail investors must always pay attention to hedge fund and insider trading sentiment, and NCI Building Systems, Inc. (NYSE:NCS) is an important part of this process.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.

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