Hedge Funds Are Crazy About Ply Gem Holdings Inc (PGEM)

Before putting in our own effort and resources towards finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors’ favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the 12-month period ending October 30. However, 63% of hedge funds’ top 30 stock picks from the index did beat the market, and returned nearly twice as much on average as the index. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.

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Is Ply Gem Holdings Inc (NYSE:PGEM) ready to rally soon? The best stock pickers are in an optimistic mood. The number of long hedge fund bets has moved up by 25% lately. PGEM was in 20 hedge funds’ portfolios at the end of September. There were 16 hedge funds in our database with PGEM holdings at the end of the previous quarter. At the end of this article we will also compare PGEM to other stocks including Western Digital Corp. (NASDAQ:WD), Installed Building Products Inc (NYSE:IBP), and Ehi Car Services Ltd (ADR) (NYSE:EHIC) to get a better sense of its popularity.

Follow Ply Gem Holdings Inc (NYSE:PGEM)

In today’s marketplace there are tons of gauges shareholders use tosize up publicly traded companies. A duo of the most innovative gauges are hedge fund and insider trading moves. Experts at Insider Monkey, a website specializing in hedge funds, have shown that, historically, those who follow the best picks of the elite investment managers can trounce the S&P 500 by a solid amount (see the details here).

With all of this in mind, let’s take a look at the key action regarding Ply Gem Holdings Inc (NYSE:PGEM).

How have hedgies been trading Ply Gem Holdings Inc (NYSE:PGEM)?

At the end of the third quarter, a total of 20 of the hedge funds tracked by Insider Monkey were long in this stock, an increase of 25% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes significantly.

When looking at the hedgies followed by Insider Monkey, Raging Capital Management, managed by William C. Martin, holds the number one position in Ply Gem Holdings Inc (NYSE:PGEM). Raging Capital Management has a $40.8 million position in the stock, comprising 5.4% of its 13F portfolio. Coming in second is Peter Schliemann of Rutabaga Capital Management, with a $21 million position; 2.6% of its 13F portfolio is allocated to the company. Some other members of the smart money that are bullish consist of Thomas E. Claugus’s GMT Capital, Chuck Royce’s Royce & Associates, and Andrew Grossman and Michael Levitt’s LG Capital Management.

As industrywide interest jumped, key hedge funds have been driving this bullishness. Millennium Management, managed by Israel Englander, initiated the most outsized position in Ply Gem Holdings Inc (NYSE:PGEM). Millennium Management had $2.5 million invested in the company at the end of the quarter. Glenn Russell Dubin’s Highbridge Capital Management also initiated a $0.5 million position during the quarter. The following funds were also among the new PGEM investors: Neil Chriss’ Hutchin Hill Capital, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Chao Ku’s Nine Chapters Capital Management.

Let’s go over hedge fund activity in other stocks similar to Ply Gem Holdings Inc (NYSE:PGEM). We will take a look at Western Digital Corp. (NASDAQ:WD), Installed Building Products Inc (NYSE:IBP), Ehi Car Services Ltd (ADR) (NYSE:EHIC), and New Mountain Finance Corp. (NYSE:NMFC). This group of stocks’ market values match PGEM’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WD 16 36203 -2
IBP 19 106141 5
EHIC 5 16151 -1
NMFC 7 5756 0

As you can see these stocks had an average of 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $41 million, well below the $104 million invested in Ply Gem. Installed Building Products Inc (NYSE:IBP) is the most popular stock in this table. On the other hand Ehi Car Services Ltd (ADR) (NYSE:EHIC) is the least popular one with only five bullish hedge fund positions. Compared to these stocks Ply Gem Holdings Inc (NYSE:PGEM) is more popular among hedge funds. Considering that hedge funds are fond of this stock, it may be a good idea to analyze it in detail and potentially include it in your portfolio.