#4 Builders FirstSource Inc. (NASDAQ:BLDR)
– Investors with Long Positions (as of December 31): 30
– Aggregate Value of Investors’ Holdings (as of December 31): $254.74 Million
Builders FirstSource Inc. (NASDAQ:BLDR) lost its appeal among the investors monitored by Insider Monkey during the October-December period, as the number of funds invested in the company dropped to 30 from 39 quarter-over-quarter. Nonetheless, the value of funds’ positions in the company increased to $254.74 million from $231.62 million during the same period and represented 21% of Builders FirstSource’s outstanding stock on December 31. The company operates as a supplier and manufacturer of building materials, manufactured components and construction services primarily in the professional segment of the U.S. residential building products supply market, mainly serving professional customers such as homebuilders and remodeling contractors. The Pro Segment of the residential building products supply market is highly fragmented, so Builders FirstSource mostly faces competition from privately-held local businesses. Therefore, the company does have a strong competitive edge over smaller competitors given its customer relationships, local market knowledge and competitive pricing. The company’s 2015 net sales reached $3.56 billion, which marked an increase of 122.2% year-on-year. The increase was mainly driven by recent acquisitions, which added $1.91 billion to the 2015 top-line figure. Excluding the impact of acquisitions, net sales increased 3.1% year-on-year due to an 8.5% increase in volume, partly offset by a 5.4% impact of commodity price deflation. Shares of Builders FirstSourse have declined 7% since the beginning of 2016 despite having gained nearly 30% in the past month alone. Israel Englander’s Millennium Management reported owning 1.81 million shares of Builders FirstSource Inc. (NASDAQ:BLDR) in its 13F filing for the final quarter of 2015.
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#3 Sherwin-Williams Co (NYSE:SHW)
– Investors with Long Positions (as of December 31): 43
– Aggregate Value of Investors’ Holdings (as of December 31): $1.91 Billion
The number of hedge funds with long positions in Sherwin-Williams Co (NYSE:SHW) declined to 43 from 45 during the last three months of 2015, whereas the total value of those positions grew to $1.91 billion from $1.61 billion quarter-on-quarter. Just recently, Sherwin-Williams, which engages in the manufacturing and sale of paint, coatings and related products, announced an agreement to purchase paint maker The Valspar Corp (NYSE:VAL) for approximately $11.3 billion. Under the terms of the freshly-inked deal, Valspar shareholders are set to receive $113 per share in cash. The combined company has 2015 pro-forma annual revenue of approximately $15.6 billion, outpacing industry rivals such as PPG Industries Inc. (NYSE:PPG) and Akzo Nobel N.V. (ADR) (OTCMKTS:AKZOY), which had 2015 sales of $15.3 billion and $13 billion, respectively. The multi-billion-dollar deal is anticipated to drive $280 million of annual synergies in the areas of sourcing, SG&A, process and efficiency savings within two years, while the long-term annual cost synergy aim is $320 million. Analysts at Credit Suisse recently initiated coverage on Sherwin-Williams with an ‘Outperform’ rating and a price target of $308. According to Credit Suisse analysts, there is a 95% probability that the aforementioned combination will close successfully, an 80% probability that the deal will go through without any divestitures and a 15% probability that the deal will go through with some divestitures. Shares of Sherwin-Williams are 9% in the green year-to-date. Jim Simons’ Renaissance Technologies had 303,900 shares of Sherwin-Williams Co (NYSE:SHW) in its portfolio at the end of December 2015.
