In this article we are going to use hedge fund sentiment as a tool and determine whether Builders FirstSource, Inc. (NASDAQ:BLDR) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Builders FirstSource, Inc. (NASDAQ:BLDR) has experienced an increase in hedge fund interest of late. Builders FirstSource, Inc. (NASDAQ:BLDR) was in 48 hedge funds’ portfolios at the end of March. The all time high for this statistic was 43. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 37 hedge funds in our database with BLDR holdings at the end of December. Our calculations also showed that BLDR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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Robert Pohly of Samlyn Capital
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Do Hedge Funds Think BLDR Is A Good Stock To Buy Now?
At first quarter’s end, a total of 48 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 30% from one quarter earlier. By comparison, 29 hedge funds held shares or bullish call options in BLDR a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Coliseum Capital was the largest shareholder of Builders FirstSource, Inc. (NASDAQ:BLDR), with a stake worth $394.7 million reported as of the end of March. Trailing Coliseum Capital was Select Equity Group, which amassed a stake valued at $246 million. Samlyn Capital, Anomaly Capital Management, and Marshall Wace LLP were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Coliseum Capital allocated the biggest weight to Builders FirstSource, Inc. (NASDAQ:BLDR), around 29.56% of its 13F portfolio. Soapstone Capital is also relatively very bullish on the stock, setting aside 13.92 percent of its 13F equity portfolio to BLDR.
With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Coliseum Capital, managed by Christopher Shackelton and Adam Gray, assembled the largest position in Builders FirstSource, Inc. (NASDAQ:BLDR). Coliseum Capital had $394.7 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $92 million investment in the stock during the quarter. The following funds were also among the new BLDR investors: Stanley Druckenmiller’s Duquesne Capital, David Thomas’s Atalan Capital, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.
Let’s go over hedge fund activity in other stocks similar to Builders FirstSource, Inc. (NASDAQ:BLDR). We will take a look at Centrais Elétricas Brasileiras S.A. – Eletrobrás (NYSE:EBR), Levi Strauss & Co. (NYSE:LEVI), Melco Resorts & Entertainment Limited (NASDAQ:MLCO), Upstart Holdings, Inc. (NASDAQ:UPST), Lamar Advertising Company (REIT) (NASDAQ:LAMR), AECOM (NYSE:ACM), and Continental Resources, Inc. (NYSE:CLR). This group of stocks’ market caps are similar to BLDR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EBR | 5 | 1208 | -1 |
| LEVI | 19 | 253280 | -2 |
| MLCO | 29 | 728338 | -1 |
| UPST | 13 | 1798914 | -2 |
| LAMR | 35 | 427242 | -1 |
| ACM | 38 | 1005485 | 1 |
| CLR | 23 | 154016 | -6 |
| Average | 23.1 | 624069 | -1.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.1 hedge funds with bullish positions and the average amount invested in these stocks was $624 million. That figure was $1694 million in BLDR’s case. AECOM (NYSE:ACM) is the most popular stock in this table. On the other hand Centrais Elétricas Brasileiras S.A. – Eletrobrás (NYSE:EBR) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Builders FirstSource, Inc. (NASDAQ:BLDR) is more popular among hedge funds. Our overall hedge fund sentiment score for BLDR is 90. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th and still beat the market by 6.1 percentage points. Unfortunately BLDR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on BLDR were disappointed as the stock returned -8.9% since the end of the first quarter (through 6/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
