Is BlueLinx Holdings Inc. (BXC) Going to Burn These Hedge Funds?

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Before we spend many hours researching a company, we’d like to analyze what hedge funds and billionaire investors think of the stock first. We would like to do so because the elite investors’ consensus returns have been exceptional. The top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% during the last 12 months ending in October 30. Sixty three percent of these 30 stocks outperformed the market. Although the elite funds occasionally have their duds, such as Micron and Anadarko Petroleum, which fell 50% and 26%, respectively, during the same time period, the hedge fund picks seem to work on average. In the following paragraphs, we find out what the billionaire investors and hedge funds think of BlueLinx Holdings Inc. (NYSE:BXC).

The 53% drop registered by BlueLinx Holdings Inc. (NYSE:BXC)’s stock since the beginning of the year, led to investors selling their holdings and, in the third quarter, the number of bullish hedge fund positions (among the funds we track) decreased by 3. BXC was in 7 hedge funds’ portfolios at the end of September. At the end of this article we will also compare BXC to other stocks, including RCS Capital Corp (NYSE:RCAP), Quest Resource Holding Corp (NASDAQ:QRHC), and ReachLocal Inc. (NASDAQ:RLOC) to get a better sense of its popularity.

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If you’d ask most stock holders, hedge funds are perceived as worthless, old financial tools of years past. While there are greater than 8000 funds in operation today, Our researchers choose to focus on the bigwigs of this club, about 700 funds. Most estimates calculate that this group of people control the majority of the smart money’s total asset base, and by following their top equity investments, Insider Monkey has unsheathed several investment strategies that have historically surpassed the market. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 12 percentage points a year for a decade in their back tests.

Now, let’s take a peek at the key action regarding BlueLinx Holdings Inc. (NYSE:BXC).

How are hedge funds trading BlueLinx Holdings Inc. (NYSE:BXC)?

Heading into Q4, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a decline of 30% from the previous quarter. Nevertheless, there were several funds that held substantial holdings in the company as of the end of September.

When looking at the institutional investors followed by Insider Monkey, Stephen Feinberg’s Cerberus Capital Management has the largest position in BlueLinx Holdings Inc. (NYSE:BXC), worth close to $33 million, comprising 2.7% of its total 13F portfolio. Sitting at the No. 2 spot is Clint Carlson’s Carlson Capital, with a $4.3 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. The remaining peers with similar optimism include Phil Frohlich’s Prescott Group Capital Management, Alexander Medina Seaver’s Stadium Capital Management, and Phill Gross and Robert Atchinson’s Adage Capital Management.

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