Hedge Funds Never Been This Bullish On Builders FirstSource (BLDR)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 873 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of June 30th, 2021. What do these smart investors think about Builders FirstSource, Inc. (NYSE:BLDR)?

Builders FirstSource, Inc. (NYSE:BLDR) investors should be aware of an increase in support from the world’s most elite money managers recently. Builders FirstSource, Inc. (NYSE:BLDR) was in 60 hedge funds’ portfolios at the end of June. The all time high for this statistic is 48. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 48 hedge funds in our database with BLDR positions at the end of the first quarter. Our calculations also showed that BLDR isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Ricky Sandler of Eminence Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s take a look at the key hedge fund action surrounding Builders FirstSource, Inc. (NYSE:BLDR).

Do Hedge Funds Think BLDR Is A Good Stock To Buy Now?

At second quarter’s end, a total of 60 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in BLDR over the last 24 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Coliseum Capital, managed by Christopher Shackelton and Adam Gray, holds the number one position in Builders FirstSource, Inc. (NYSE:BLDR). Coliseum Capital has a $378 million position in the stock, comprising 33.5% of its 13F portfolio. The second largest stake is held by Robert Pohly of Samlyn Capital, with a $158.8 million position; the fund has 2.3% of its 13F portfolio invested in the stock. Remaining peers that hold long positions contain Israel Englander’s Millennium Management, Ben Jacobs’s Anomaly Capital Management and Ricky Sandler’s Eminence Capital. In terms of the portfolio weights assigned to each position Coliseum Capital allocated the biggest weight to Builders FirstSource, Inc. (NYSE:BLDR), around 33.52% of its 13F portfolio. Soapstone Capital is also relatively very bullish on the stock, setting aside 15.83 percent of its 13F equity portfolio to BLDR.

Consequently, specific money managers were leading the bulls’ herd. Eminence Capital, managed by Ricky Sandler, created the largest position in Builders FirstSource, Inc. (NYSE:BLDR). Eminence Capital had $132 million invested in the company at the end of the quarter. Steven Tananbaum’s GoldenTree Asset Management also initiated a $51.1 million position during the quarter. The other funds with new positions in the stock are Renaissance Technologies, James Woodson Davis’s Woodson Capital Management, and Michael Gelband’s ExodusPoint Capital.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Builders FirstSource, Inc. (NYSE:BLDR) but similarly valued. These stocks are ICL Group Ltd. (NYSE:ICL), Ciena Corporation (NYSE:CIEN), Berry Global Group Inc (NYSE:BERY), Pearson PLC (NYSE:PSO), Paysafe Limited (NYSE:PSFE), CyrusOne Inc (NASDAQ:CONE), and Flex Ltd. (NASDAQ:FLEX). This group of stocks’ market values are closest to BLDR’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.3 hedge funds with bullish positions and the average amount invested in these stocks was $698 million. That figure was $1946 million in BLDR’s case. Paysafe Limited (NYSE:PSFE) is the most popular stock in this table. On the other hand ICL Group Ltd. (NYSE:ICL) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Builders FirstSource, Inc. (NYSE: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 returned 25.7% in 2021 through September 27th but still managed to beat the market by 6.2 percentage points. Hedge funds were also right about betting on BLDR as the stock returned 28.7% since the end of June (through 9/27) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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