Here's What Hurt Builders FirstSource (BLDR) in Q4

Pelican Bay Capital Management (PBCM), an investment management company, released its fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. PBCM Concentrated Value Strategy returned 8.5% in the quarter, compared to a 3.8% return for the Russell 1000 Value Index. The robust performance of AI-related stocks and commodities exposure drove the Strategy’s performance in the quarter. For the full year, the Strategy returned 20.6% compared to 15.9% for the Index. The firm seeks to invest in high-quality companies with a strong balance sheet. Please review the Fund’s top five holdings to gain insights into their key selections for 2025.

In its fourth-quarter 2025 investor letter, PBCM highlighted Builders FirstSource, Inc. (NYSE:BLDR) as among its underperformers. Based in Irving, Texas, Builders FirstSource, Inc. (NYSE:BLDR) is a building material, manufactured components, and construction services provider. The one-month return of Builders FirstSource, Inc. (NYSE:BLDR) was 0.27%, and its shares lost 20.10% of their value over the last 52 weeks. On February 6, 2026, Builders FirstSource, Inc. (NYSE:BLDR) stock closed at $124.42 per share, with a market capitalization of $13.758 billion.

PBCM stated the following regarding Builders FirstSource, Inc. (NYSE:BLDR) in its fourth quarter 2025 investor letter:

"Our homebuilding companies were the weakest performers this quarter with Builders FirstSource, Inc. (NYSE:BLDR) and Toll Brothers (TOL), both landing on our list of bottom 5 detractors. Elevated mortgage rates and slowdown in new homes sales have soured investor sentiment on the sector and drove down their stock prices. We remain bullish on the long-term prospects for the homebuilding sector as we believe there is a shortage of housing and these companies trade for large discounts to their intrinsic values. We added to our position in both companies this quarter."

Builders FirstSource, Inc. (NYSE:BLDR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 72 hedge fund portfolios held Builders FirstSource, Inc. (NYSE:BLDR) at the end of the third quarter, compared to 74 in the previous quarter. While we acknowledge the potential of Builders FirstSource, Inc. (NYSE:BLDR) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Builders FirstSource, Inc. (NYSE:BLDR) and shared Heartland Value Plus Fund's views on the company. In addition, please check out our hedge fund investor letters Q4 2025 page for more investor letters from hedge funds and other leading investors.

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