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Hedge Funds Have Never Been This Bullish On BlueLinx Holdings Inc. (BXC)

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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 866 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st. In this article we look at what those investors think of BlueLinx Holdings Inc. (NYSE:BXC).

BlueLinx Holdings Inc. (NYSE:BXC) shareholders have witnessed an increase in support from the world's most elite money managers lately. BlueLinx Holdings Inc. (NYSE:BXC) was in 19 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 17. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 17 hedge funds in our database with BXC positions at the end of the fourth quarter. Our calculations also showed that BXC isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.

Jeffrey Gendell of Tontine Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we're going to take a look at the recent hedge fund action surrounding BlueLinx Holdings Inc. (NYSE:BXC).

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

At first quarter's end, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 12% from one quarter earlier. On the other hand, there were a total of 6 hedge funds with a bullish position in BXC a year ago. With hedgies' sentiment swirling, there exists a few key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

Is BXC A Good Stock To Buy?
Is BXC A Good Stock To Buy?

The largest stake in BlueLinx Holdings Inc. (NYSE:BXC) was held by Nokomis Capital, which reported holding $24.1 million worth of stock at the end of December. It was followed by Tontine Asset Management with a $17.4 million position. Other investors bullish on the company included Portolan Capital Management, Voss Capital, and Solas Capital Management. In terms of the portfolio weights assigned to each position Nokomis Capital allocated the biggest weight to BlueLinx Holdings Inc. (NYSE:BXC), around 10.44% of its 13F portfolio. Solas Capital Management is also relatively very bullish on the stock, setting aside 7.56 percent of its 13F equity portfolio to BXC.

As industrywide interest jumped, specific money managers were leading the bulls' herd. Intrinsic Edge Capital, managed by Mark Coe, established the largest position in BlueLinx Holdings Inc. (NYSE:BXC). Intrinsic Edge Capital had $2.4 million invested in the company at the end of the quarter. Chuck Royce's Royce & Associates also initiated a $1 million position during the quarter. The other funds with brand new BXC positions are Paul Marshall and Ian Wace's Marshall Wace LLP and Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as BlueLinx Holdings Inc. (NYSE:BXC) but similarly valued. These stocks are Source Capital, Inc. (NYSE:SOR), Oil States International, Inc. (NYSE:OIS), SciPlay Corporation (NASDAQ:SCPL), Future FinTech Group Inc. (NASDAQ:FTFT), The9 Limited (NASDAQ:NCTY), Itamar Medical Ltd. (NASDAQ:ITMR), and Bioceres Crop Solutions Corp. (NYSE:BIOX). This group of stocks' market caps resemble BXC's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SOR,2,45352,-1 OIS,17,17933,4 SCPL,23,95517,-2 FTFT,2,1161,-1 NCTY,5,8855,4 ITMR,13,90249,5 BIOX,4,750,3 Average,9.4,37117,1.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.4 hedge funds with bullish positions and the average amount invested in these stocks was $37 million. That figure was $109 million in BXC's case. SciPlay Corporation (NASDAQ:SCPL) is the most popular stock in this table. On the other hand Source Capital, Inc. (NYSE:SOR) is the least popular one with only 2 bullish hedge fund positions. BlueLinx Holdings Inc. (NYSE:BXC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BXC is 77.5. 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. 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 gained 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately BXC wasn't nearly as popular as these 5 stocks and hedge funds that were betting on BXC were disappointed as the stock returned -4.8% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.