Is Universal Forest Products, Inc. (NASDAQ:UFPI) a good investment?
In the eyes of many traders, hedge funds are seen as bloated, old financial tools of a forgotten age. Although there are over 8,000 hedge funds with their doors open currently, Insider Monkey aim at the aristocrats of this group, around 525 funds. It is assumed that this group has its hands on the lion’s share of all hedge funds’ total assets, and by monitoring their best stock picks, we’ve uncovered a number of investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).
Just as useful, positive insider trading activity is another way to analyze the investments you’re interested in. Obviously, there are a variety of motivations for an upper level exec to downsize shares of his or her company, but only one, very simple reason why they would initiate a purchase. Many empirical studies have demonstrated the useful potential of this tactic if investors know where to look (learn more here).
Now that that’s out of the way, it’s important to study the recent info about Universal Forest Products, Inc. (NASDAQ:UFPI).
Hedge fund activity in Universal Forest Products, Inc. (NASDAQ:UFPI)
At the end of the second quarter, a total of 6 of the hedge funds we track were long in this stock, a change of 20% from the first quarter. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their holdings meaningfully.
As one would understandably expect, certain bigger names were breaking ground themselves. PEAK6 Capital Management, managed by Matthew Hulsizer, created the most outsized call position in Universal Forest Products, Inc. (NASDAQ:UFPI). PEAK6 Capital Management had 3.4 million invested in the company at the end of the quarter. Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners also initiated a $0.7 million position during the quarter. The following funds were also among the new UFPI investors: Cliff Asness’s AQR Capital Management, Ken Griffin’s Citadel Investment Group, and Paul Tudor Jones’s Tudor Investment Corp.
Insider trading activity in Universal Forest Products, Inc. (NASDAQ:UFPI)
Insider buying made by high-level executives is best served when the company in question has seen transactions within the past 180 days. Over the latest half-year time period, Universal Forest Products, Inc. (NASDAQ:UFPI) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We’ll check out the relationship between both of these indicators in other stocks similar to Universal Forest Products, Inc. (NASDAQ:UFPI). These stocks are AAON, Inc. (NASDAQ:AAON), Griffon Corporation (NYSE:GFF), Trex Company, Inc. (NYSE:TREX), Apogee Enterprises, Inc. (NASDAQ:APOG), and Headwaters Inc (NYSE:HW). This group of stocks belong to the general building materials industry and their market caps match UFPI’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| AAON, Inc. (NASDAQ:AAON) | 8 | 0 | 0 |
| Griffon Corporation (NYSE:GFF) | 10 | 0 | 0 |
| Trex Company, Inc. (NYSE:TREX) | 11 | 0 | 0 |
| Apogee Enterprises, Inc. (NASDAQ:APOG) | 11 | 0 | 0 |
| Headwaters Inc (NYSE:HW) | 21 | 0 | 0 |
Using the results explained by our research, average investors must always track hedge fund and insider trading activity, and Universal Forest Products, Inc. (NASDAQ:UFPI) applies perfectly to this mantra.
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Universal Forest Products, Inc. (UFPI): Insiders Aren’t Crazy About It
