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Is Quanex Building Products Corporation (NX) A Good Stock To Buy?

Because Quanex Building Products Corporation (NYSE:NX) has faced bearish sentiment from the aggregate hedge fund industry, we can see that there exists a select few fund managers that elected to cut their full holdings in the third quarter. At the top of the heap, Israel Englander’s Millennium Management cashed in the largest investment of all the hedgies tracked by Insider Monkey, comprising close to $1.1 million in stock. Ken Grossman and Glen Schneider’s fund, SG Capital Management, also dropped its stock, about $0.4 million worth of NX shares.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Quanex Building Products Corporation (NYSE:NX) but similarly valued. We will take a look at Galapagos NV (ADR) (NASDAQ:GLPG), William Lyon Homes (NYSE:WLH), Clean Energy Fuels Corp (NASDAQ:CLNE), and Francesca’s Holdings Corp (NASDAQ:FRAN). This group of stocks’ market valuations are closest to NX’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GLPG 16 168438 2
WLH 17 298596 1
CLNE 11 31851 -1
FRAN 24 141500 3

As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $160 million. That figure was $46 million in NX’s case. Francesca’s Holdings Corp (NASDAQ:FRAN) is the most popular stock in this table. On the other hand Clean Energy Fuels Corp (NASDAQ:CLNE) is the least popular one with only 11 bullish hedge fund positions. Quanex Building Products Corporation (NYSE:NX) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard FRAN might be a better candidate to consider taking a long position in.

Disclosure: none.

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