Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those successful funds in these small-cap stocks. In the following paragraphs, we will analyze NCI Building Systems, Inc. (NYSE:NCS) from the perspective of those successful funds.
Is NCI Building Systems, Inc. (NYSE:NCS) an attractive investment right now? Hedge funds seem to be becoming more hopeful, since the number of bullish hedge fund bets that are revealed through the 13F filings went up by three last quarter. There were 23 hedge funds in our database with NCS positions at the end of September. At the end of this article we will also compare NCS to other stocks including Stewart Information Services Corp (NYSE:STC), ACCO Brands Corporation (NYSE:ACCO), and Seacor Holdings, Inc. (NYSE:CKH) to get a better sense of its popularity.
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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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Now, let’s take a look at the new action regarding NCI Building Systems, Inc. (NYSE:NCS).
How are hedge funds trading NCI Building Systems, Inc. (NYSE:NCS)?
At the end of the third quarter, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on NCI Building Systems, which represents an increase of 15% from the end of the second quarter. Below, you can check out the change in hedge fund sentiment towards NCS over the last 5 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Jim Simons’ Renaissance Technologies has the largest position in NCI Building Systems, Inc. (NYSE:NCS), worth close to $27.4 million, accounting for less than 0.1%% of its total 13F portfolio. Coming in second is Ken Griffin’s Citadel Investment Group, with a $17.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism consist of Chuck Royce’s Royce & Associates, Peter Schliemann’s Rutabaga Capital Management and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet 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 a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. Adage Capital Management, led by Phill Gross and Robert Atchinson, initiated the biggest position in NCI Building Systems, Inc. (NYSE:NCS). Adage Capital Management had $7.2 million invested in the company at the end of the third quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $1.9 million position between July and September. The following funds were also among the new NCS investors: Glenn Russell Dubin’s Highbridge Capital Management, Dmitry Balyasny’s Balyasny Asset Management, and Robert B. Gillam’s McKinley Capital Management.
Let’s also examine hedge fund activity in other stocks similar to NCI Building Systems, Inc. (NYSE:NCS). These stocks are Stewart Information Services Corp (NYSE:STC), ACCO Brands Corporation (NYSE:ACCO), Seacor Holdings, Inc. (NYSE:CKH), and Usa Compression Partners LP (NYSE:USAC). This group of stocks’ market valuations are similar to NCS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| STC | 20 | 308945 | 6 |
| ACCO | 20 | 40676 | 1 |
| CKH | 12 | 208258 | 0 |
| USAC | 6 | 10534 | 0 |
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 $142 million. That figure was $143 million in NCS’s case. Stewart Information Services Corp (NYSE:STC) is the most popular stock in this table. On the other hand Usa Compression Partners LP (NYSE:USAC) is the least popular one with only six funds holding shares. Compared to these stocks NCI Building Systems, Inc. (NYSE:NCS) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: none
