Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Vulcan Materials Company (NYSE:VMC).
Is Vulcan Materials Company (NYSE:VMC) a buy right now? Investors who are in the know were in a pessimistic mood. The number of long hedge fund bets fell by 5 in recent months. Vulcan Materials Company (NYSE:VMC) was in 43 hedge funds’ portfolios at the end of June. The all time high for this statistic is 57. Our calculations also showed that VMC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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Joel Greenblatt of Gotham Asset Management
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Do Hedge Funds Think VMC Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 43 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -10% from one quarter earlier. By comparison, 51 hedge funds held shares or bullish call options in VMC a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Stockbridge Partners was the largest shareholder of Vulcan Materials Company (NYSE:VMC), with a stake worth $231.2 million reported as of the end of June. Trailing Stockbridge Partners was Holocene Advisors, which amassed a stake valued at $180.8 million. Alkeon Capital Management, Citadel Investment Group, and D E Shaw were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Park Presidio Capital allocated the biggest weight to Vulcan Materials Company (NYSE:VMC), around 6.04% of its 13F portfolio. Stockbridge Partners is also relatively very bullish on the stock, earmarking 4.92 percent of its 13F equity portfolio to VMC.
Because Vulcan Materials Company (NYSE:VMC) has experienced bearish sentiment from the smart money, logic holds that there was a specific group of funds that elected to cut their entire stakes in the second quarter. Interestingly, John Armitage’s Egerton Capital Limited said goodbye to the largest investment of the “upper crust” of funds monitored by Insider Monkey, valued at an estimated $167.3 million in stock, and Louis Bacon’s Moore Global Investments was right behind this move, as the fund dumped about $22.7 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 5 funds in the second quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Vulcan Materials Company (NYSE:VMC) but similarly valued. These stocks are United Rentals, Inc. (NYSE:URI), Dollar Tree, Inc. (NASDAQ:DLTR), NovoCure Limited (NASDAQ:NVCR), W.W. Grainger, Inc. (NYSE:GWW), CNH Industrial NV (NYSE:CNHI), Trip.com Group Limited (NASDAQ:TCOM), and MongoDB, Inc. (NASDAQ:MDB). This group of stocks’ market caps are similar to VMC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| URI | 47 | 1173038 | 6 |
| DLTR | 42 | 1379674 | 1 |
| NVCR | 25 | 500806 | 3 |
| GWW | 29 | 221218 | -1 |
| CNHI | 24 | 680613 | 1 |
| TCOM | 41 | 1997956 | 6 |
| MDB | 44 | 1693975 | -2 |
| Average | 36 | 1092469 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 36 hedge funds with bullish positions and the average amount invested in these stocks was $1092 million. That figure was $1375 million in VMC’s case. United Rentals, Inc. (NYSE:URI) is the most popular stock in this table. On the other hand CNH Industrial NV (NYSE:CNHI) is the least popular one with only 24 bullish hedge fund positions. Vulcan Materials Company (NYSE:VMC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for VMC is 63.9. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.9% in 2021 through October 1st and beat the market again by 5.6 percentage points. Unfortunately VMC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on VMC were disappointed as the stock returned -0.5% since the end of June (through 10/1) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Vulcan Materials Co (NYSE:VMC)
Follow Vulcan Materials Co (NYSE:VMC)
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Disclosure: None. This article was originally published at Insider Monkey.
