5 Construction Stocks Hedge Funds Like as Spending Slumps

1. Caterpillar Inc. (NYSE:CAT)

Number of Hedge Fund Shareholders: 57

Topping the list of construction stocks hedge funds like is Caterpillar Inc. (NYSE:CAT), hedge fund ownership of which has risen by 19% over the past two quarters. Ken Fisher’s Fisher Asset Management and Michael Larson’s Bill & Melinda Gates Foundation Trust each own more than 7.2 million shares of CAT.

Caterpillar Inc. (NYSE:CAT) manufactures heavy equipment for several industries, with construction accounting for one of its three divisions. Supply chain challenges have impacted Caterpillar’s ability to meet demand and the demand for its equipment also appears to be slackening heading into the latter half of 2022. On the plus side, Caterpillar continues to drive its bottom-line growth thanks to strong pricing, and given its robust free cash flow and shareholder-friendly usage of it, it’s no wonder Caterpillar is hedge funds’ favorite construction stock.

The Diamond Hill Large Cap Concentrated Fund also discussed Caterpillar Inc. (NYSE:CAT) in its Q1 2022 investor letter, having this to say about the company:

“We also initiated a position in Caterpillar (NYSE:CAT), one of the world’s leading manufacturers of construction and mining equipment. It’s a company we know well, as we have owned it in our large cap portfolio for quite some time. Recent share price weakness provided an opportunity for us to add it to our large cap concentrated portfolio at an attractive discount to our estimate of intrinsic value. We believe Caterpillar stands to benefit from increased capital investment supported by a healthier/recovering end market environment, particularly in construction and mining.”

For more of the latest stock picks worth considering for your portfolio, check out 10 Stocks to Buy According to William Von Mueffling’s Cantillon Capital Management and 10 Important Energy Stocks Making Moves After Earnings.

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