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PGT, Inc. (PGTI): Hedge Funds Are Bullish and Insiders Are Bearish, What Should You Do?

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PGT, Inc. (NASDAQ:PGTI) was in 7 hedge funds’ portfolio at the end of the fourth quarter of 2012. PGTI investors should pay attention to an increase in enthusiasm from smart money lately. There were 5 hedge funds in our database with PGTI holdings at the end of the previous quarter.

If you’d ask most market participants, hedge funds are perceived as underperforming, outdated investment tools of years past. While there are greater than 8000 funds trading today, we at Insider Monkey hone in on the moguls of this club, about 450 funds. It is widely believed that this group has its hands on most of the smart money’s total asset base, and by paying attention to their highest performing equity investments, we have determined a number of investment strategies that have historically beaten the S&P 500 index. 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 started sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 24 percentage points in 7 months (see the details here).

Equally as integral, bullish insider trading sentiment is a second way to parse down the stock market universe. As the old adage goes: there are many motivations for an insider to drop shares of his or her company, but only one, very clear reason why they would initiate a purchase. Many empirical studies have demonstrated the valuable potential of this tactic if shareholders understand what to do (learn more here).

With all of this in mind, we’re going to take a gander at the key action surrounding PGT, Inc. (NASDAQ:PGTI).

What have hedge funds been doing with PGT, Inc. (NASDAQ:PGTI)?

At year’s end, a total of 7 of the hedge funds we track held long positions in this stock, a change of 40% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes significantly.

Of the funds we track, Phill Gross and Robert Atchinson’s Adage Capital Management had the most valuable position in PGT, Inc. (NASDAQ:PGTI), worth close to $19.7 million, comprising 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Chuck Royce of Royce & Associates, with a $5.1 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other peers that hold long positions include Jim Simons’s Renaissance Technologies, Richard Driehaus’s Driehaus Capital and Israel Englander’s Millennium Management.

PGT, Inc. (NASDAQ:PGTI)As one would reasonably expect, specific money managers have jumped into PGT, Inc. (NASDAQ:PGTI) headfirst. Driehaus Capital, managed by Richard Driehaus, created the most valuable position in PGT, Inc. (NASDAQ:PGTI). Driehaus Capital had 1.1 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $0.3 million investment in the stock during the quarter.

What do corporate executives and insiders think about PGT, Inc. (NASDAQ:PGTI)?

Insider buying is particularly usable when the company we’re looking at has experienced transactions within the past six months. Over the latest 180-day time frame, PGT, Inc. (NASDAQ:PGTI) has seen zero unique insiders buying, and 3 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to PGT, Inc. (NASDAQ:PGTI). 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 NCI Building Systems, Inc. (NYSE:NCS). This group of stocks are the members of the general building materials industry and their market caps resemble PGTI’s market cap.

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