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Should You Avoid TopBuild Corp (BLD)?

Because TopBuild Corp (NYSE:BLD) has witnessed bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there was a specific group of fund managers that decided to sell off their positions entirely in the third quarter. At the top of the heap, Phill Gross and Robert Atchinson’s Adage Capital Management cut the biggest position of all the hedgies monitored by Insider Monkey, worth close to $17.2 million in stock, and Richard S. Meisenberg’s ACK Asset Management was right behind this move, as the fund cut about $10.5 million worth of BLD shares. These transactions are interesting, as total hedge fund interest dropped by 5 funds in the third quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as TopBuild Corp (NYSE:BLD) but similarly valued. These stocks are Allegheny Technologies Incorporated (NYSE:ATI), Imperva Inc (NYSE:IMPV), Potlatch Corporation (NASDAQ:PCH), and WNS (Holdings) Limited (ADR) (NYSE:WNS). This group of stocks’ market valuations are closest to BLD’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ATI 13 183180 -4
IMPV 33 489982 12
PCH 12 79586 1
WNS 11 64725 0

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 $204 million. That figure was $183 million in BLD’s case. Imperva Inc (NYSE:IMPV) is the most popular stock in this table. On the other hand WNS (Holdings) Limited (ADR) (NYSE:WNS) is the least popular one with only 11 bullish hedge fund positions. TopBuild Corp (NYSE:BLD) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard IMPV might be a better candidate to consider a long position.

Disclosure: none.

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