Is Universal Forest Products, Inc. (NASDAQ:UFPI) undervalued? Prominent investors are betting on the stock. The number of long hedge fund positions improved by 4 in recent months.
In the eyes of most investors, hedge funds are assumed to be unimportant, old financial vehicles of the past. While there are more than 8000 funds trading at the moment, we hone in on the aristocrats of this club, around 450 funds. It is estimated that this group has its hands on the lion’s share of all hedge funds’ total capital, and by paying attention to their highest performing stock picks, we have found a few investment strategies that have historically beaten the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 24 percentage points in 7 months (explore the details and some picks here).
Equally as integral, positive insider trading activity is a second way to break down the stock market universe. There are plenty of incentives for an upper level exec to sell shares of his or her company, but just one, very simple reason why they would initiate a purchase. Various empirical studies have demonstrated the impressive potential of this strategy if you understand where to look (learn more here).
With these “truths” under our belt, we’re going to take a look at the key action encompassing Universal Forest Products, Inc. (NASDAQ:UFPI).
How have hedgies been trading Universal Forest Products, Inc. (NASDAQ:UFPI)?
In preparation for this year, a total of 8 of the hedge funds we track were long in this stock, a change of 100% from the third quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their holdings considerably.
According to our comprehensive database, Cliff Asness’s AQR Capital Management had the most valuable position in Universal Forest Products, Inc. (NASDAQ:UFPI), worth close to $0.6 million, comprising less than 0.1%% of its total 13F portfolio. Coming in second is Paul Tudor Jones of Tudor Investment Corp, with a $0.4 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedgies with similar optimism include Jeffrey Gendell’s Tontine Asset Management, Ken Gray and Steve Walsh’s Bryn Mawr Capital and Charles Davidson’s Wexford Capital.
What have insiders been doing with Universal Forest Products, Inc. (NASDAQ:UFPI)?
Insider buying is most useful when the company we’re looking at has experienced transactions within the past six months. Over the last 180-day time frame, Universal Forest Products, Inc. (NASDAQ:UFPI) has experienced zero unique insiders buying, and 4 insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity 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 are the members of the general building materials industry and their market caps are closest to UFPI’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| AAON, Inc. (NASDAQ:AAON) | 10 | 0 | 3 |
| Griffon Corporation (NYSE:GFF) | 9 | 0 | 0 |
| Trex Company, Inc. (NYSE:TREX) | 15 | 0 | 10 |
| Apogee Enterprises, Inc. (NASDAQ:APOG) | 12 | 0 | 3 |
| Headwaters Inc (NYSE:HW) | 22 | 0 | 3 |
With the results demonstrated by Insider Monkey’s strategies, retail investors must always keep an eye on hedge fund and insider trading sentiment, and Universal Forest Products, Inc. (NASDAQ:UFPI) is no exception.
