What should smart Trex Company, Inc. (NYSE:TREX) investors be doing?
In today’s marketplace, there are a multitude of methods market participants can use to analyze stocks. A couple of the most useful are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the elite fund managers can outclass their index-focused peers by a superb amount (see just how much).
Just as useful, positive insider trading activity is a second way to look at the investments you're interested in. Obviously, there are a variety of incentives for a bullish insider to downsize shares of his or her company, but only one, very clear reason why they would initiate a purchase. Various empirical studies have demonstrated the useful potential of this strategy if "monkeys" understand where to look (learn more here).
What's more, we're going to analyze the newest info for Trex Company, Inc. (NYSE:TREX).
In preparation for the third quarter, a total of 11 of the hedge funds we track were bullish in this stock, a change of -21% from the first quarter. With the smart money's sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their stakes significantly.
Out of the hedge funds we follow, Renaissance Technologies, managed by Jim Simons, holds the most valuable position in Trex Company, Inc. (NYSE:TREX). Renaissance Technologies has a $12.2 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Renaissance Technologies's heels is Malcolm Fairbairn of Ascend Capital, with a $5.6 million position; 0.2% of its 13F portfolio is allocated to the company. Some other hedgies that are bullish include Chuck Royce's Royce & Associates, Richard Driehaus's Driehaus Capital and D. E. Shaw's D E Shaw.
Because Trex Company, Inc. (NYSE:TREX) has faced declining interest from upper-tier hedge fund managers, it's easy to see that there was a specific group of hedgies who were dropping their full holdings in Q1. At the top of the heap, Alexander Mitchell's Scopus Asset Management dumped the largest position of all the hedgies we monitor, comprising close to $5 million in stock, and Van Schreiber of Bennett Lawrence Management was right behind this move, as the fund sold off about $3.4 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 3 funds in Q1.
Bullish insider trading is particularly usable when the company we're looking at has seen transactions within the past 180 days. Over the last six-month time period, Trex Company, Inc. (NYSE:TREX) has experienced 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 Trex Company, Inc. (NYSE:TREX). These stocks are AAON, Inc. (NASDAQ:AAON), Griffon Corporation (NYSE:GFF), Universal Forest Products, Inc. (NASDAQ:UFPI), Headwaters Inc (NYSE:HW), and Apogee Enterprises, Inc. (NASDAQ:APOG). All of these stocks are in the general building materials industry and their market caps are similar to TREX's market cap.