Parnassus Mid Cap Growth Fund Added Builders FirstSource (BLDR) on a Dip

Parnassus Investments, an investment management company, released the “Parnassus Mid Cap Growth Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. The Russell Midcap Growth Index fell 7.12% in the first quarter, starting with a continuation of the late 2024 rally but later experiencing a sharp decline. The Fund (Investor Shares) fell -9.98% (net of fees) in the quarter, compared to the Russell Midcap Growth Index’s -7.12% fall. Stock selection in Consumer Discretionary and Industrials contributed to the relative performance, while Communication Services and Health Care detracted. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its first-quarter 2025 investor letter, Parnassus Mid Cap Growth Fund highlighted stocks such as Builders FirstSource, Inc. (NYSE:BLDR). Based in Irving, Texas, Builders FirstSource, Inc. (NYSE:BLDR) is a building material, manufactured components, and construction services provider. The one-month return of Builders FirstSource, Inc. (NYSE:BLDR) was 13.45%, and its shares lost 4.83% of their value over the last 52 weeks. On July 2, 2025, Builders FirstSource, Inc. (NYSE:BLDR) stock closed at $127.89 per share, with a market capitalization of $14.134 billion.

Parnassus Mid Cap Growth Fund stated the following regarding Builders FirstSource, Inc. (NYSE:BLDR) in its Q1 2025 investor letter:

“As the largest building products distributor in the U.S., Builders FirstSource, Inc. (NYSE:BLDR) benefits from economies of scale in a fragmented market. We bought the stock after a sell-off due to a rise in interest rates. We expect Builders FirstSource will continue to gain market share, consolidate the market, and repurchase its stock thanks to its meaningful free cash flow.”

Builders FirstSource (BLDR) Jumps 8.7% as Investors Scoop Up "Undervalued" Stocks

A crane lifting a truss during the construction of a new building.

Builders FirstSource, Inc. (NYSE:BLDR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 58 hedge fund portfolios held Builders FirstSource, Inc. (NYSE:BLDR) at the end of the first quarter, which was 59 in the previous quarter. Builders FirstSource, Inc.’s (NYSE:BLDR) first quarter sales decreased 6% to $3.7 billion. While we acknowledge the potential of Builders FirstSource, Inc. (NYSE:BLDR) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.

In another article, we covered Builders FirstSource, Inc. (NYSE:BLDR) and shared Sands Capital Global Growth Fund’s views on the company. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors. While we acknowledge the potential of BLDR as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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