5 Construction Stocks Hedge Funds Like as Spending Slumps

2. United Rentals, Inc. (NYSE:URI)

Number of Hedge Fund Shareholders: 47

Hedge fund ownership of United Rentals, Inc. (NYSE:URI) has risen by 27% over the past two quarters, making the company the second most popular construction stock among hedge funds. Billionaire Louis Bacon of Moore Global Investments built a new stake in URI during the first quarter.

It’s not hard to see why hedge funds like equipment rental company United Rentals, Inc. (NYSE:URI), as its successful playbook of generating strong free cash flow and using that to repurchase shares has proven to be a winner over the past decade, not to mention being the kind of strategy that hedge funds love to advocate. The company has bought back nearly 32% of its shares over the past decade, while driving diluted EPS growth 433% higher.

In its Q1 2022 investor letter, the Clearbridge Investments Mid Cap Growth Strategy cited United Rentals, Inc. (NYSE:URI)’s non-residential strength as one of the reasons why the company’s shares were a strong performer for the fund:

“More promising was the performance of several of the portfolio’s core compounding growth names. Construction equipment leasing company United Rentals (NYSE:URI) benefited from continued improvement of non-residential construction trends. The leading contributors to absolute returns during the first quarter included United Rentals.”