NCI Building: Pump Up the Volume

HOUSTON (TheStreet) -- NCI Building Systems (NCS Quote) shares were plummeting Monday on above-average volume, retracing a 25% gain earned over the previous five sessions.

NCI Building shares were tumbling by 62 cents, or 19.9%, to $2.50. More than 5.7 million shares changed hands by 3 p.m. EDT Monday, compared to the stock's three-month average daily volume of 1.75 million, according to Yahoo! Finance.

NCI Building had a 19.9 million-share float with a massive short interest float of 54% as of Sept. 25, according to Yahoo! Finance. Less than 2% of the company's shares are held by insiders, with a whopping 87% owned by institutions.

Investor posts on Internet message boards noted the high short interest and institutional ownership of NCI shares, arguing that institutions were taking profits after last week's gain or short traders were simply holding the stock down.

Other traders asserted that momentum players were creating a panic by arguing that the stock could face major dilution over the short term. They noted that there were few block trades that would indicate institutions were unloading shares.

NCI was recently in the news after the company said Oct. 9 that it was working on a refinancing deal that includes a $250 million equity investment by a fund managed by Clayton, Dubilier & Rice. "Once effective, the refinancing will significantly reduce debt and provide substantial flexibility in the current economic downturn, as well as the resources to support future growth," the company said in a release.