Hedge Funds Are Buying Owens Corning (OC)

Is Owens Corning (NYSE:OC) a buy?

If you were to ask many of your fellow readers, hedge funds are assumed to be bloated, old financial tools of a period lost to current times. Although there are In excess of 8,000 hedge funds in operation today, Insider Monkey aim at the masters of this group, close to 525 funds. Analysts calculate that this group has its hands on the lion’s share of the smart money’s total capital, and by watching their highest performing picks, we’ve uncovered a number of investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).

Just as necessary, optimistic insider trading activity is another way to look at the financial markets. There are a variety of incentives for an executive to downsize shares of his or her company, but only one, very simple reason why they would initiate a purchase. Various empirical studies have demonstrated the market-beating potential of this method if investors know where to look (learn more here).

Owens Corning logo

Now that that’s out of the way, it’s important to examine the newest info surrounding Owens Corning (NYSE:OC).

How have hedgies been trading Owens Corning (NYSE:OC)?

Heading into Q3, a total of 48 of the hedge funds we track were bullish in this stock, a change of 2% from one quarter earlier. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes meaningfully.

According to our 13F database, Blue Ridge Capital, managed by John Griffin, holds the biggest position in Owens Corning (NYSE:OC). Blue Ridge Capital has a $312.6 million position in the stock, comprising 3.8% of its 13F portfolio. Coming in second is Wayzata Investment Partners, managed by Patrick Halloran, which held a $266.7 million position; 29.4% of its 13F portfolio is allocated to the stock. Some other hedge funds that hold long positions include Alan Fournier’s Pennant Capital Management, David Tepper’s Appaloosa Management LP and David Gallo’s Valinor Management LLC.

With a general bullishness amongst the titans, particular hedge funds have been driving this bullishness. Blue Ridge Capital, managed by John Griffin, assembled the biggest position in Owens Corning (NYSE:OC). Blue Ridge Capital had 312.6 million invested in the company at the end of the quarter. Patrick Halloran’s Wayzata Investment Partners also made a $266.7 million investment in the stock during the quarter. The other funds with brand new OC positions are Alan Fournier’s Pennant Capital Management, David Tepper’s Appaloosa Management LP, and David Gallo’s Valinor Management LLC.

How are insiders trading Owens Corning (NYSE:OC)?

Legal insider trading, particularly when it’s bullish, is best served when the company in question has experienced transactions within the past six months. Over the latest six-month time frame, Owens Corning (NYSE:OC) has experienced zero unique insiders buying, and 4 insider sales (see the details of insider trades here).

We’ll also take a look at the relationship between both of these indicators in other stocks similar to Owens Corning (NYSE:OC). These stocks are USG Corporation (NYSE:USG), Masco Corporation (NYSE:MAS), Vulcan Materials Company (NYSE:VMC), Armstrong World Industries, Inc. (NYSE:AWI), and Martin Marietta Materials, Inc. (NYSE:MLM). This group of stocks are in the general building materials industry and their market caps match OC’s market cap.