Should You Avoid PGT, Inc. (PGTI)?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track more than 700 prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile gigantic failures like hedge funds’ recent losses in Valeant. Let’s take a closer look at what the funds we track think about PGT, Inc. (NASDAQ:PGTI) in this article.

PGT, Inc. (NASDAQ:PGTI)’s stock is up year-to-date, but it lost 13% in the third quarter, which led to a weaker sentiment from smart money investors. At the end of this article we will also compare PGTI to other stocks, including Synergy Pharmaceuticals Inc (NASDAQ:SGYP), Veritiv Corp (NYSE:VRTV), and Unisys Corporation (NYSE:UIS) to get a better sense of its popularity.

In the 21st century investor’s toolkit there are a multitude of gauges stock traders can use to analyze publicly traded companies. Two of the best gauges are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the elite hedge fund managers can trounce the broader indices by a very impressive margin (see the details here).

Keeping this in mind, let’s analyze the new action encompassing PGT, Inc. (NASDAQ:PGTI).

How have hedgies been trading PGT, Inc. (NASDAQ:PGTI)?

At the Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a decline of 39% from the second quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies holds the most valuable position in PGT, Inc. (NASDAQ:PGTI). Renaissance Technologies has a $39.9 million position in the stock, comprising 0.1% of its 13F portfolio. The second most bullish fund manager is PAR Capital Management, led by Paul Reeder and Edward Shapiro, holding a $13.8 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism include Chuck Royce’s Royce & Associates, Richard Driehaus’s Driehaus Capital and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

Because PGT, Inc. (NASDAQ:PGTI) has experienced a decline in interest from hedge fund managers, it’s safe to say that there is a sect of hedgies who sold off their entire stakes heading into Q4. It’s worth mentioning that Richard S. Meisenberg’s ACK Asset Management cut the largest position of the 700 funds watched by Insider Monkey, worth about $5.9 million in stock. Mark Coe’s fund, Coe Capital Management, also dropped its stock, about $0.8 million worth. These moves are interesting, as total hedge fund interest dropped by 7 funds heading into Q4.

Let’s go over hedge fund activity in other stocks similar to PGT, Inc. (NASDAQ:PGTI). We will take a look at Synergy Pharmaceuticals Inc (NASDAQ:SGYP), Veritiv Corp (NYSE:VRTV), Unisys Corporation (NYSE:UIS), and Monmouth R.E. Inv. Corp. (NYSE:MNR). All of these stocks’ market caps are similar to PGTI’s market cap.

As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $94 million, compared to $83 million in PGTI’s case. Synergy Pharmaceuticals Inc (NASDAQ:SGYP) is the most popular stock in this table. On the other hand Monmouth R.E. Inv. Corp. (NYSE:MNR) is the least popular one with only 8 bullish hedge fund positions. PGT, Inc. (NASDAQ:PGTI) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard SGYP might be a better candidate to consider a long position.