Hedge Funds Cashing Out Of BlueLinx Holdings Inc. (BXC)

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded BlueLinx Holdings Inc. (NYSE:BXC) based on those filings.

Is BlueLinx Holdings Inc. (NYSE:BXC) a buy here? Money managers are getting less bullish. The number of bullish hedge fund positions went down by 1 in recent months. Our calculations also showed that BXC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). BXC was in 6 hedge funds’ portfolios at the end of March. There were 7 hedge funds in our database with BXC positions at the end of the previous quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Phill Gross of Adage Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to go over the recent hedge fund action encompassing BlueLinx Holdings Inc. (NYSE:BXC).

How have hedgies been trading BlueLinx Holdings Inc. (NYSE:BXC)?

Heading into the second quarter of 2020, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from one quarter earlier. By comparison, 11 hedge funds held shares or bullish call options in BXC a year ago. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Brett Hendrickson’s Nokomis Capital has the number one position in BlueLinx Holdings Inc. (NYSE:BXC), worth close to $6.3 million, amounting to 3% of its total 13F portfolio. Coming in second is Adage Capital Management, led by Phill Gross and Robert Atchinson, holding a $4.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism comprise Frederick Tucker Golden’s Solas Capital Management, Jeffrey Gendell’s Tontine Asset Management and Christopher Shackelton and Adam Gray’s Coliseum Capital. In terms of the portfolio weights assigned to each position Solas Capital Management allocated the biggest weight to BlueLinx Holdings Inc. (NYSE:BXC), around 3.91% of its 13F portfolio. Nokomis Capital is also relatively very bullish on the stock, designating 3.05 percent of its 13F equity portfolio to BXC.

Seeing as BlueLinx Holdings Inc. (NYSE:BXC) has witnessed falling interest from hedge fund managers, logic holds that there exists a select few hedgies who were dropping their full holdings in the first quarter. Intriguingly, Israel Englander’s Millennium Management said goodbye to the largest stake of all the hedgies followed by Insider Monkey, totaling about $1.8 million in stock. Matthew Hulsizer’s fund, PEAK6 Capital Management, also said goodbye to its stock, about $0 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 1 funds in the first quarter.

Let’s go over hedge fund activity in other stocks similar to BlueLinx Holdings Inc. (NYSE:BXC). We will take a look at Sunesis Pharmaceuticals, Inc. (NASDAQ:SNSS), Oncternal Therapeutics, Inc. (NASDAQ:ONCT), Hunt Companies Finance Trust, Inc. (NYSE:HCFT), and Cyren Ltd (NASDAQ:CYRN). This group of stocks’ market caps resemble BXC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SNSS 11 13098 -1
ONCT 2 271 0
HCFT 5 1422 1
CYRN 2 897 0
Average 5 3922 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $4 million. That figure was $19 million in BXC’s case. Sunesis Pharmaceuticals, Inc. (NASDAQ:SNSS) is the most popular stock in this table. On the other hand Oncternal Therapeutics, Inc. (NASDAQ:ONCT) is the least popular one with only 2 bullish hedge fund positions. BlueLinx Holdings Inc. (NYSE:BXC) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th but still beat the market by 14.2 percentage points. Hedge funds were also right about betting on BXC as the stock returned 81% in Q2 (through June 10th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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