Saira Malik, Nuveen’s head of equities and fixed income, joined ‘Closing Bell’ on CNBC on March 26 to discuss her investment strategy in the middle of this uncertain market. She emphasized that two dominant themes are shaping the second quarter of this year: policy uncertainty and questions surrounding the pace of the economic slowdown. Malik noted that markets have shown a little optimism after a rebound from correction territory. This was driven by investor expectations of watered-down tariffs and the return of the term ‘transitory’ regarding inflation effects from tariffs. However, she highlighted that the economy continues to slow. Given this, Malik prefers defensive market sectors, particularly infrastructure. She also identified municipal bonds as a favored fixed-income category.
These appeal to local investors who seek stable income streams in the middle of this economic uncertainty. Malik also acknowledged the risk that continued negative sentiment about consumer weakness could become a self-fulfilling prophecy. She pointed out that the economy’s recent strength has been driven by consumer spending and employment, with about half of payroll growth since 2019 coming from government jobs. The recent data on consumer spending, retail sales, and confidence have been weak, but consumers often express pessimism without reducing spending proportionally. Despite this, she stressed that the economy is slowing and warned that ongoing tariff uncertainty could cause a sharper economic downturn. However, she also mentioned potential upside from forthcoming tax cuts and deregulation, which could provide economic support. Malik explained that the market’s recent optimism comes from increasing clarity about tariff implementation and targets.
Malik reiterated her preference for sectors like infrastructure, municipal bonds, and small-cap equities as attractive areas in this uncertain environment. That being said, we’re here with a list of the 15 small-cap construction and material stocks hedge funds are buying.
A construction team in a mining datacenter building work site with plans and equipment in hand.
Our Methodology
We first sifted through financial media reports, ETFs, and Insider Monkey’s Q4 2024 hedge funds database reports to compile a list of the small-cap construction and materials stocks hedge funds are buying. For this article, we define small-cap stocks as those that trade between $10 billion and $30 billion, as of April 28. We then selected the top 15 stocks and ranked them in ascending order of the number of hedge funds that have stakes in them. In cases where an equal number of hedge funds held two or more stocks, we used the market cap as a tiebreaker.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
15 Small-Cap Construction and Materials Stocks Hedge Funds Are Buying
15. James Hardie Industries (NYSE:JHX)
Market Capitalization as of April 28: $10.09 billion
Number of Hedge Fund Holders: 5
James Hardie Industries (NYSE:JHX) manufactures and sells fiber cement, fiber gypsum, and cement-bonded building products for interior and exterior building construction applications. It operates in three segments: North America Fiber Cement, Asia Pacific Fiber Cement, and Europe Building Products.
The company’s North America segment shipped 744 million standard feet of volume in FQ3 2025, which was consistent with James Hardie’s expectations. The segment also achieved a 29.1% EBIT margin in the quarter, which highlights the company’s ability to deliver savings through its Hardie Operating System initiatives and focused cost-control actions. Year-to-date sales in North America were well over $2 billion, which represents a double-digit CAGR over the last 5 years.
James Hardie Industries (NYSE:JHX) is strategizing through exclusivity arrangements with homebuilders. Furthermore, the completion and commissioning of Prattville Sheet Machine number three represents a key milestone in expanding capacity to support future growth in North America.
14. ArcelorMittal (NYSE:MT)
Market Capitalization as of April 28: $23.04 billion
Number of Hedge Fund Holders: 18
ArcelorMittal (NYSE:MT) operates as an integrated steel and mining company that offers semi-finished flat products, finished flat products, semi-finished long products, finished long products, and seamless & welded pipes & tubes. It sells its products to various customers in the automotive, appliance, engineering, construction, energy, and machinery industries.
The company generated over $2 billion of investable cash flow in 2024, which brought the total to $21 billion since 2021. ArcelorMittal (NYSE:MT) also invested $1.3 billion in high-return strategic growth projects in 2024, which are expected to contribute a structural EBITDA impact of $1.9 billion, with $400 million anticipated in 2025 and a further $600 million in 2026.
Completed projects like the Vega coal mill complex in Brazil, the new hot strip mill in Mexico, and the 1GW renewable project in India are performing well. Notably, the company’s absolute carbon emissions are ~half the level of 2018, which is driven by portfolio optimization. There are ongoing investments in decarbonization projects like the EAF in Gijon and the revamp of the two EAFs in Sestao under the XCarb brand.
