Is Advanced Drainage Systems (WMS) a Great Long-Term Investment?

ClearBridge Investments, an investment management firm, published its “Mid Cap Growth Strategy” second quarter 2022 investor letter – a copy of which can be downloaded here. The ClearBridge Mid Cap Growth Strategy underperformed the Russell Midcap Growth Index during the second quarter. On an absolute basis, the Strategy had losses across all 10 sectors in which it was invested during the quarter (out of 11 sectors total). The leading detractors were the IT and consumer discretionary sectors, while the real estate sector was the smallest detractor. Go over the fund’s top 5 positions to have a glimpse of its finest picks for 2022.

In its Q2 2022 investor letter, ClearBridge Mid Cap Growth Strategy Fund mentioned Advanced Drainage Systems, Inc. (NYSE:WMS) and explained its insights for the company. Founded in 1966, Advanced Drainage Systems, Inc. (NYSE:WMS) is a Hilliard, Ohio-based plastics pipe company with an $11.9 billion market capitalization. Advanced Drainage Systems, Inc. (NYSE:WMS) delivered a 4.82% return since the beginning of the year, while its 12-month returns are up by 18.14%. The stock closed at $142.69 per share on August 24, 2022.

Here is what ClearBridge Mid Cap Growth Strategy Fund has to say about Advanced Drainage Systems, Inc. (NYSE:WMS) in its Q2 2022 investor letter: 

“While IT is traditionally considered the bastion of growth opportunities and continues to remain our largest absolute weighting in the portfolio, only three of the portfolio’s top 10 performers this quarter were in IT, with select names in the cyclical industrials and defensive health care sectors among the leading contributors. These included new addition Advanced Drainage Systems (NYSE:WMS) in the industrials sector. Advanced Drainage Systems manufactures and markets thermoplastic pipes, water management products and drainage solutions for use in construction and infrastructure. We believe Advanced Drainage Systems will benefit from a progression within the construction industry away from concrete toward recycled plastic; it also has a deep competitive moat as the only plastic player of scale.”

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Our calculations show that Advanced Drainage Systems, Inc. (NYSE:WMS) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Advanced Drainage Systems, Inc. (NYSE:WMS) was in 26 hedge fund portfolios at the end of the second quarter of 2022, compared to 23 funds in the previous quarter. Advanced Drainage Systems, Inc. (NYSE:WMS) delivered a 32.40% return in the past 3 months.

In September 2021, we also shared another hedge fund’s views on Advanced Drainage Systems, Inc. (NYSE:WMS) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q2 page.

Disclosure: None. This article is originally published at Insider Monkey.