Hedge Funds Are Crazy About Builders FirstSource, Inc. (BLDR)

Builders FirstSource, Inc. (NASDAQ:BLDR) has experienced an increase in activity from the world’s largest hedge funds recently.

In today’s marketplace, there are dozens of gauges shareholders can use to watch Mr. Market. A duo of the most underrated are hedge fund and insider trading activity. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the elite money managers can outperform the broader indices by a significant amount (see just how much).

Just as important, positive insider trading activity is a second way to parse down the financial markets. There are a variety of stimuli for an executive to sell shares of his or her company, but only one, very clear reason why they would buy. Plenty of empirical studies have demonstrated the useful potential of this method if shareholders understand what to do (learn more here).

Keeping this in mind, it’s important to take a glance at the key action surrounding Builders FirstSource, Inc. (NASDAQ:BLDR).

Hedge fund activity in Builders FirstSource, Inc. (NASDAQ:BLDR)

At the end of the fourth quarter, a total of 11 of the hedge funds we track held long positions in this stock, a change of 10% from one quarter earlier. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings considerably.

Of the funds we track, Stadium Capital Management, managed by Alexander Medina Seaver, holds the most valuable position in Builders FirstSource, Inc. (NASDAQ:BLDR). Stadium Capital Management has a $83.1 million position in the stock, comprising 19.8% of its 13F portfolio. On Stadium Capital Management’s heels is Phil Frohlich of Prescott Group Capital Management, with a $12.2 million position; the fund has 3.2% of its 13F portfolio invested in the stock. Other hedgies with similar optimism include Chuck Royce’s Royce & Associates, Jim Simons’s Renaissance Technologies and Israel Englander’s Millennium Management.

Consequently, specific money managers have jumped into Builders FirstSource, Inc. (NASDAQ:BLDR) headfirst. Two Sigma Advisors, managed by John Overdeck and David Siegel, established the most outsized position in Builders FirstSource, Inc. (NASDAQ:BLDR). Two Sigma Advisors had 0.2 million invested in the company at the end of the quarter. Charles Davidson’s Wexford Capital also made a $0.1 million investment in the stock during the quarter. The only other fund with a brand new BLDR position is Ken Griffin’s Citadel Investment Group.

What have insiders been doing with Builders FirstSource, Inc. (NASDAQ:BLDR)?

Insider trading activity, especially when it’s bullish, is at its handiest when the primary stock in question has experienced transactions within the past six months. Over the latest half-year time period, Builders FirstSource, Inc. (NASDAQ:BLDR) has seen zero unique insiders buying, and 3 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Builders FirstSource, Inc. (NASDAQ:BLDR). These stocks are The Home Depot, Inc. (NYSE:HD), Lowe’s Companies, Inc. (NYSE:LOW), Orchard Supply Hardware Stores Corp (NASDAQ:OSH), , and Lumber Liquidators Holdings Inc (NYSE:LL). This group of stocks are the members of the home improvement stores industry and their market caps resemble BLDR’s market cap.