Should You Buy PGT, Inc. (PGTI)? Find Out What Hedge Funds Have To Say

We have been waiting for this for a year and finally the third quarter ended up showing a nice bump in the performance of small-cap stocks. Both the S&P 500 and Russell 2000 were up since the end of the second quarter, but small-cap stocks outperformed the large-cap stocks by double digits. This is important for hedge funds, which are big supporters of small-cap stocks, because their investors started pulling some of their capital out due to poor recent performance. It is very likely that equity hedge funds will deliver better risk adjusted returns in the second half of this year. In this article we are going to look at how this recent market trend affected the sentiment of hedge funds towards PGT, Inc. (NASDAQ:PGTI), and what that likely means for the prospects of the company and its stock.

Is PGT, Inc. (NASDAQ:PGTI) a safe investment today? Prominent investors are betting on the stock. The number of long hedge fund positions strengthened by 1 recently. PGTI was in 14 hedge funds’ portfolios at the end of the third quarter of 2016. There were 13 hedge funds in our database with PGTI positions at the end of the previous quarter. At the end of this article we will also compare PGTI to other stocks including Chromcraft Revington, Inc. (NYSEAMEX:CRC), Ennis, Inc. (NYSE:EBF), and Momo Inc (ADR) (NASDAQ:MOMO) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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Hedge fund activity in PGT, Inc. (NASDAQ:PGTI)

Heading into the fourth quarter of 2016, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a gain of 8% from one quarter earlier, pushing bullish hedge fund positions to a yearly high. The graph below displays the number of hedge funds with bullish position in PGTI over the last 5 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Renaissance Technologies, founded by Jim Simons, holds the biggest position in PGT, Inc. (NASDAQ:PGTI). Renaissance Technologies has a $29.4 million position in the stock. The second largest stake is held by Chuck Royce of Royce & Associates, with a $12.3 million position. Some other peers that are bullish contain Paul Reeder and Edward Shapiro’s PAR Capital Management, Craig C. Albert’s Sheffield Asset Management, and Richard Driehaus’ Driehaus Capital. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

With general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Citadel Investment Group, led by Ken Griffin, created the most outsized position in PGT, Inc. (NASDAQ:PGTI). Citadel Investment Group had $0.4 million invested in the company at the end of the quarter. Matthew Tewksbury’s Stevens Capital Management also initiated a $0.3 million position during the quarter. The other funds with new positions in the stock are John Osterweis’ Osterweis Capital Management and Mike Vranos’ Ellington.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as PGT, Inc. (NASDAQ:PGTI) but similarly valued. We will take a look at Chromcraft Revington, Inc. (NYSEAMEX:CRC), Ennis, Inc. (NYSE:EBF), Momo Inc (ADR) (NASDAQ:MOMO), and Movado Group, Inc (NYSE:MOV). This group of stocks’ market valuations match PGTI’s market valuation.

As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $124 million. That figure was $73 million in PGTI’s case. Chromcraft Revington, Inc. (NYSEAMEX:CRC) is the most popular stock in this table. On the other hand Ennis, Inc. (NYSE:EBF) is the least popular one with only 13 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 CRC might be a better candidate to consider taking a long position in.

Disclosure: None