We recently published a list of Top 10 Stocks to Buy According to XN Exponent Advisors LLC. In this article, we are going to take a look at where Vulcan Materials Company (NYSE:VMC) stands against other top stocks to buy according to XN Exponent Advisors LLC.
Established in 2018 by Gaurav Kapadia, XN Exponent Advisors LLC is based in New York and manages approximately $2.53 billion in 13F securities according to its latest filing for the fourth quarter of 2024. With just 13 clients, the hedge fund maintains a concentrated portfolio, with its top ten holdings accounting for 69.02% of its total assets. XN employs a global investment strategy that spans both public and private markets, focusing on generating high risk-adjusted returns. The firm targets sectors where it has deep expertise while deliberately avoiding balance sheet-heavy industries such as financials, healthcare, energy, and materials.
The firm primarily invests in North America and Western Europe but remains open to opportunities in other regions that align with its strategic goals. XN’s investment approach is built around a long/short strategy, where it seeks to capitalize on market inefficiencies by purchasing undervalued assets and shorting overvalued ones. This method hinges on the firm’s ability to assess market opportunities accurately, though there is no guarantee of success. Market disruptions pose a significant risk, as they can result in substantial losses and may force XN to close out client positions to mitigate damage.
A key feature of XN’s approach is its flexibility. Unlike traditional investment firms bound by rigid diversification or leverage policies, XN can trade across a wide range of securities, issuers, countries, and sectors to align with its investment objectives. This adaptability enables the firm to respond quickly to shifting market conditions, reallocating client assets as necessary. While this strategy offers significant potential for high returns, it also carries inherent risks, particularly in volatile market environments. However, XN’s focus on specialized knowledge and strategic positioning aims to maximize opportunities while managing downside exposure.
Founder and Chief Executive Officer of XN, Gaurav Kapadia has nearly two decades of experience in public and private markets and has built a reputation as a visionary investor and business leader. Before launching XN, a firm whose name reflects the power of long-term compounding, Kapadia was the Co-Founder and Co-Managing Partner of Soroban Capital Partners, a globally recognized investment firm. Prior to that, he served as a Partner at TPG-Axon Capital, working in both New York and London. His extensive expertise in finance and investing is rooted in his academic background; he earned a Bachelor of Science in Economics from the Wharton School at the University of Pennsylvania in 1999.
Beyond his financial career, Kapadia is deeply committed to philanthropy and civic engagement, particularly in the arts, humanities, education, and social equity. In September 2023, the Mellon Foundation announced his election to its Board of Trustees, recognizing his dedication to supporting cultural and educational initiatives. He has been a strong proponent of the transformative power of art and the humanities, emphasizing their role in fostering positive societal change. Under the leadership of Mellon Foundation President Elizabeth Alexander, Kapadia expressed his excitement to contribute to the organization’s mission, citing its precision and ambitious vision as key reasons for his involvement.
Kapadia also serves on the Boards of Trustees for several influential institutions, including The Whitney Museum of American Art, The Trust for Governors Island, Uncommon Schools, and The Institute for Constitutional Advocacy and Protection at Georgetown University Law Center. His advocacy for education, civic engagement, and equality underscores his commitment to creating meaningful opportunities for underserved communities. Through his leadership in both finance and philanthropy, Kapadia continues to bridge the worlds of business and social impact, demonstrating how strategic investments—whether in financial markets or cultural institutions—can drive long-term positive change.
Our Methodology
The stocks discussed below were picked from XN Exponent Advisors LLC’s Q4 2024 13F filings. They are compiled in the ascending order of the hedge fund’s stake in them as of December 31, 2024. To assist readers with more context, we have included the hedge fund sentiment regarding each stock using data from 1009 hedge funds tracked by Insider Monkey in the fourth quarter of 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A construction site with a truck and crane unloading the company’s materials.
Vulcan Materials Company (NYSE:VMC)
Number of Hedge Fund Holders as of Q4: 57
XN Exponent Advisors LLC’s Equity Stake: $156.50 Million
Vulcan Materials Company (NYSE:VMC), a leading supplier of construction aggregates in the U.S., has strengthened its market presence through strategic acquisitions. The recent purchases of Superior and Wake Stone provide significant opportunities for growth by expanding its geographical reach and improving pricing power. These acquisitions also enhance Vulcan’s supply chain efficiency by increasing its network of facilities, which in turn helps lower transportation costs and improve delivery times. By consolidating its market position, the company is well-positioned to drive long-term value creation.
In its fourth-quarter 2024 earnings report, Vulcan Materials Company (NYSE:VMC) delivered strong results, surpassing analyst expectations. Adjusted earnings per share (EPS) reached $2.17, significantly exceeding the projected $1.76 and marking a notable increase from the previous year’s EPS of $1.46. Revenue for the quarter came in at $1.85 billion, a 1.1% year-over-year increase and slightly above consensus estimates. However, for the full year, total revenue declined to $7.42 billion from $7.78 billion in 2023, reflecting a drop in aggregate shipments from 234.6 million tons to 219.9 million tons. Despite this, Vulcan Materials Company (NYSE:VMC) managed to expand its adjusted EBITDA margin to 27.7% from 25.8%, demonstrating improved operational efficiency.
Vulcan Materials Company (NYSE:VMC)’s profitability showed resilience, with gross profit increasing by 2.6% to $2 billion, and full-year adjusted EPS rising to $7.53 from $7.00 in 2023. However, the company’s financial position saw some shifts, with cash and cash equivalents declining from $931.1 million at the end of 2023 to $559.7 million by December 2024. Long-term debt also rose from $3.88 billion to $4.91 billion. Net cash provided by operating activities decreased to $1.41 billion from $1.54 billion in the previous year. While financial pressures exist, Vulcan’s focus on strategic acquisitions and operational efficiency positions it well for sustained growth in the construction materials industry.
Baron Real Estate Fund stated the following regarding Vulcan Materials Company (NYSE:VMC) in its first quarter 2024 investor letter:
“We added to our position in Vulcan Materials Company (NYSE:VMC) during the most recent quarter. Vulcan is a real estate-related company that is the largest construction aggregates producer in the U.S. Vulcan generates approximately 90% of its gross profit from mining, processing, and transporting crushed stone, sand, and gravel (collectively, “aggregates”) from its quarries. The balance of its gross profit is derived from strategically located ready-mix concrete and asphalt. The company’s products are sold and utilized in infrastructure projects such as highways, as well as residential and non-residential construction. Vulcan has local leadership positions across its footprint.
We believe aggregates are an attractive business for two main reasons: • High barriers to entry limit new competition: Permits to open new quarries are difficult to obtain, and the approval process typically takes 5 to 10 years • Consistent pricing power through cycles: Aggregates producers have historically enjoyed great pricing power owing to the difficulty in opening competing new quarries, the limited substitutes for quality aggregates, and a high weight-to-price ratio that makes transportation expensive relative to the cost of the material. In the last 30 years, pricing of aggregates has increased, on average, 4% per year…” (Click here to read the full text)
Overall, VMC ranks 6th on our list of top stocks to buy according to XN Exponent Advisors LLC. While we acknowledge the potential for VMC as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than VMC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
