Is Builders FirstSource, Inc. (NASDAQ:BLDR) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is Builders FirstSource, Inc. (NASDAQ:BLDR) going to take off soon? Investors who are in the know are buying. The number of bullish hedge fund positions improved by 4 recently. Our calculations also showed that BLDR isn’t among the 30 most popular stocks among hedge funds. BLDR was in 37 hedge funds’ portfolios at the end of March. There were 33 hedge funds in our database with BLDR holdings at the end of the previous quarter.
To most stock holders, hedge funds are seen as worthless, old financial tools of years past. While there are greater than 8000 funds with their doors open at the moment, Our researchers look at the crème de la crème of this club, approximately 750 funds. These money managers preside over most of the hedge fund industry’s total asset base, and by shadowing their first-class picks, Insider Monkey has figured out numerous investment strategies that have historically beaten Mr. Market. Insider Monkey’s flagship hedge fund strategy surpassed the S&P 500 index by around 5 percentage points a year since its inception in May 2014 through the end of May. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 30.9% since February 2017 (through May 30th) even though the market was up nearly 24% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 11.9% in less than a couple of weeks whereas our long picks outperformed the market by 2 percentage points in this volatile 2 week period.
We’re going to take a gander at the key hedge fund action encompassing Builders FirstSource, Inc. (NASDAQ:BLDR).
How are hedge funds trading Builders FirstSource, Inc. (NASDAQ:BLDR)?
At the end of the first quarter, a total of 37 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 12% from the previous quarter. The graph below displays the number of hedge funds with bullish position in BLDR over the last 15 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Stadium Capital Management held the most valuable stake in Builders FirstSource, Inc. (NASDAQ:BLDR), which was worth $74.9 million at the end of the first quarter. On the second spot was Raging Capital Management which amassed $45 million worth of shares. Moreover, BeaconLight Capital, Soapstone Capital, and Lakewood Capital Management were also bullish on Builders FirstSource, Inc. (NASDAQ:BLDR), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, key money managers were breaking ground themselves. Millennium Management, managed by Israel Englander, assembled the most outsized position in Builders FirstSource, Inc. (NASDAQ:BLDR). Millennium Management had $12.8 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $8.2 million investment in the stock during the quarter. The following funds were also among the new BLDR investors: Noam Gottesman’s GLG Partners, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Ed Bosek’s BeaconLight Capital.
Let’s also examine hedge fund activity in other stocks similar to Builders FirstSource, Inc. (NASDAQ:BLDR). These stocks are La-Z-Boy Incorporated (NYSE:LZB), Cars.com Inc. (NYSE:CARS), Orchard Therapeutics plc (NASDAQ:ORTX), and SSR Mining Inc. (NASDAQ:SSRM). This group of stocks’ market caps resemble BLDR’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.5 hedge funds with bullish positions and the average amount invested in these stocks was $216 million. That figure was $356 million in BLDR’s case. Cars.com Inc. (NYSE:CARS) is the most popular stock in this table. On the other hand Orchard Therapeutics plc (NASDAQ:ORTX) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Builders FirstSource, Inc. (NASDAQ:BLDR) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on BLDR as the stock returned 8.1% during the same period and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.