BlueLinx (BXC) Stock Has Risen 95% in Last One Year, Outperforms Market

If you are looking for the best ideas for your portfolio you may want to consider some of Greenhaven Road Capital‘s top stock picks. Greenhaven Road Capital, an investment management firm, is bullish on BlueLinx Holdings Inc. (NYSE:BXC) stock. In its Q3 2019 investor letter – you can download a copy here – the firm discussed its investment thesis on BlueLinx Holdings Inc. (NYSE:BXC) stock. BlueLinx Holdings Inc. (NYSE:BXC) is a leading wholesale distributor of building and industrial products.

On October 13, 2019, Greenhaven Road Capital had released its Q3 2019 investor letter. BlueLinx Holdings Inc. (NYSE:BXC) was one of the Top 5 holdings of Greenhaven in Q3 2019. The stock has posted a return of 95% in the trailing one year period, outperforming the S&P 500 Index which returned 15% in the same period. This suggests that the investment firm was right in its decision.

Greenhaven’s fund posted a return of less than 1% in the third quarter of 2019, underperforming the S&P 500 Index which returned 1.7% in the same quarter. Let’s take a look at comments made by Greenhaven Road Capital about BlueLinx Holdings Inc. (NYSE:BXC) in the Q3 2019 investor letter.

“BlueLinx (BXC) – BlueLinx has appreciated itself into being a Top 5 holding, rising over +40% during the course of the quarter. Investors that bid up the stock were clearly not focused on the reported revenue numbers, as sales declined almost -20%. There were a couple of developments that may have led to the rising share price. First, the company got its first analyst coverage, so now there are sellside earnings estimates, which may have attracted some of the quantitative investors. The company has 9M shares, a sub-$300M market capitalization, and is currently running at approximately $100M in adjusted EBITDA per year. Now, there is debt, but all of the earnings improvements that would come from revenue growth would accrue to the equity holders (us). Thus, it was a positive development on the earnings call when the CEO said, “We have challenged our sales teams to grow our revenues from current levels by at least 10% in 2020 and another 10% in 2021.” This seems like a tall order, and a radical departure from concerns some investors have had about potential lack of synergy from the merger with Cedar Creek. The combined company should benefit from lower interest rates, and there are several paths to $10+ per year in free cash flow. This is not a great business, but it may turn out to be a very good investment.”

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In Q1 2020, the number of bullish hedge fund positions on BlueLinx Holdings Inc. (NYSE:BXC) stock decreased by about 14% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t believe in BXC’s growth potential. Our calculations showed that BlueLinx Holdings Inc. (NYSE:BXC) isn’t ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

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Disclosure: None. This article is originally published at Insider Monkey.