Cooper Investors, an investment management firm, published its “Global Equities Fund (Hedged)” first quarter 2022 investor letter – a copy of which can be downloaded here. After a strong 2021, the Fund has endured a tough start to the year, returning -12.45%. In simple terms, the very narrow parts of the market doing well year to date (oil and gas, miners, some banks) are areas in which the fund is underweight, whereas many of the businesses we do own got dragged into a period of indiscriminate selling early in the quarter. 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 Q1 2022 investor letter, Cooper Investors Global Equities Fund mentioned Ferguson plc (NYSE:FERG) and explained its insights for the company. Founded in 1887, Ferguson plc (NYSE:FERG) is a Wokingham, United Kingdom-based multinational plumbing and heating products distributor with a $28.6 billion market capitalization. Ferguson plc (NYSE:FERG) delivered a -26.42% return since the beginning of the year, while its 12-month returns are up by 1.92%. The stock closed at $132.00 per share on April 15, 2022.
Here is what Cooper Investors Global Equities Fund has to say about Ferguson plc (NYSE:FERG) in its Q1 2022 investor letter:
“While we typically wouldn’t delve into huge detail around one 3-month period, since inception it has been fairly unusual for the Fund to underperform a weak market hence it is worth making some further comments regarding key drivers of the relative underperformance versus the Benchmark. Cyclicals – The Cyclicals owned in the portfolio tend to be focused businesses that are leaders in niche industries – Ferguson in plumbing and HVAC distribution. Our view is that the Cyclicals we own today exhibit significant value latency. With prices off 15-20% and ongoing earnings growth up 10-15% we own businesses today led by best-in-class management teams (and not dependent on commodity prices) that are roughly 30% cheaper than 3-6 months ago. An example is Ferguson which after the price fall combined with double digit earnings growth trades on around 14-15x next years earnings. During the quarter the business moved its primary listing to the US, where direct peers trade around 10 turns of multiple higher (Reece as a local comparative trades at ~30x). Ferguson carries almost no debt, and is returning 4-5% a year of cash to shareholders through dividends and buybacks.”
Our calculations show that Ferguson plc (NYSE:FERG) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Ferguson plc (NYSE:FERG) was in 12 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 10 funds in the previous quarter. Ferguson plc (NYSE:FERG) delivered a -23.40% return in the past 3 months.
In October 2021, we published an article that includes Ferguson plc (NYSE:FERG) in 11 Best High Dividend Stocks Under $50. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.
Disclosure: None. This article is originally published at Insider Monkey.
