Is Builders FirstSource, Inc. (BLDR) Going to Burn These Hedge Funds?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30th, so let’s proceed with the discussion of the hedge fund sentiment on Builders FirstSource, Inc. (NYSE:BLDR).

Builders FirstSource, Inc. (NYSE:BLDR) was in 53 hedge funds’ portfolios at the end of September. The all time high for this statistic is 60. BLDR investors should pay attention to a decrease in support from the world’s most elite money managers in recent months. There were 60 hedge funds in our database with BLDR holdings at the end of June. Our calculations also showed that BLDR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind we’re going to take a look at the new hedge fund action encompassing Builders FirstSource, Inc. (NYSE:BLDR).

Christian Leone of Luxor Capital Group

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

At the end of the third quarter, a total of 53 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -12% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in BLDR over the last 25 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Christopher Shackelton and Adam Gray’s Coliseum Capital has the biggest position in Builders FirstSource, Inc. (NYSE:BLDR), worth close to $460.6 million, amounting to 40.9% of its total 13F portfolio. The second most bullish fund manager is Samlyn Capital, managed by Robert Pohly, which holds a $193.7 million position; the fund has 2.6% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism include Christian Leone’s Luxor Capital Group, Parag Vora’s HG Vora Capital Management and Malcolm Levine’s Dendur Capital. In terms of the portfolio weights assigned to each position Coliseum Capital allocated the biggest weight to Builders FirstSource, Inc. (NYSE:BLDR), around 40.89% of its 13F portfolio. Dendur Capital is also relatively very bullish on the stock, setting aside 19.85 percent of its 13F equity portfolio to BLDR.

Judging by the fact that Builders FirstSource, Inc. (NYSE:BLDR) has experienced declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there exists a select few funds that slashed their full holdings in the third quarter. Intriguingly, Gregg Moskowitz’s Interval Partners sold off the biggest stake of all the hedgies monitored by Insider Monkey, worth close to $27.9 million in stock, and Stanley Druckenmiller’s Duquesne Capital was right behind this move, as the fund said goodbye to about $24.2 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 7 funds in the third quarter.

Let’s also examine hedge fund activity in other stocks similar to Builders FirstSource, Inc. (NYSE:BLDR). We will take a look at American Financial Group, Inc. (NYSE:AFG), Henry Schein, Inc. (NASDAQ:HSIC), Dicks Sporting Goods Inc (NYSE:DKS), GDS Holdings Limited (NASDAQ:GDS), Cemex SAB de CV (NYSE:CX), Ozon Holdings PLC (NASDAQ:OZON), and Regal Beloit Corporation (NYSE:RBC). This group of stocks’ market caps are similar to BLDR’s market cap.

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As you can see these stocks had an average of 25.1 hedge funds with bullish positions and the average amount invested in these stocks was $789 million. That figure was $2213 million in BLDR’s case. Dicks Sporting Goods Inc (NYSE:DKS) is the most popular stock in this table. On the other hand Ozon Holdings PLC (NASDAQ:OZON) is the least popular one with only 13 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 74.5. 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 28.6% in 2021 through November 30th but still managed to beat the market by 5.6 percentage points. Hedge funds were also right about betting on BLDR as the stock returned 34.2% since the end of September (through 11/30) 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.