LRT Capital Management, an investment management firm, published its second-quarter 2022 investor letter – a copy of which can be downloaded here. As of July 1st, 2022, LRT’s net exposure was approximately 77.74%, and its beta-adjusted exposure was 50.7%. The fund currently has 57 long positions with the top 10 accounting for approximately 40.7% of its total long exposure. Try to spend some time taking a look at the fund’s top 5 holdings to be informed about their best picks for 2022.
In its Q2 2022 investor letter, LRT Capital Management mentioned A. O. Smith Corporation (NYSE:AOS) and explained its insights for the company. Founded in 1874, A. O. Smith Corporation (NYSE:AOS) is a Milwaukee, Wisconsin-based residential and commercial water heaters and boilers manufacturer with a $8.6 billion market capitalization. A. O. Smith Corporation (NYSE:AOS) delivered a -35.40% return since the beginning of the year, while its 12-month returns are down by -19.55%. The stock closed at $55.46 per share on July 18, 2022.
Here is what LRT Capital Management has to say about A. O. Smith Corporation (NYSE:AOS) in its Q2 2022 investor letter:
“A.O. Smith is the largest US manufacturer of residential and commercial water heaters, boilers and water treatment products. The company generates close to $3 billion in annual sales. The majority of the company’s business (73%) is done in North America, with the balance coming from China and India. Approximately 80% of demand is replacing existing heaters and 20% is tied to new construction. The company continues to benefit from a shift towards higher efficiency, but more expensive, tankless heaters.
A.O. Smith generates returns on invested capital in the high teens. The company uses its earnings to consistently grow its dividends and share repurchases. Over the past three years the company’s performance has been hurt by its exposure to China as its business there suffered due to the US-China trade war and poor execution. We believe the China business is back on track and the all-important US business is doing better than ever as housing demand heats up in the US. The company beat earnings estimates over the past several quarters and is currently enjoying very good performance as the hot U.S housing market continues to be strong.19 A.O. Smith also recently increased its share repurchase authorization.”
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Our calculations show that A. O. Smith Corporation (NYSE:AOS) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. A. O. Smith Corporation (NYSE:AOS) was in 38 hedge fund portfolios at the end of the second quarter of 2022, compared to 28 funds in the previous quarter. A. O. Smith Corporation (NYSE:AOS) delivered a -12.44% return in the past 3 months.
In May 2021, we also shared another hedge fund’s views on A. O. Smith Corporation (NYSE:AOS) 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.
