Third Avenue Management recently released its Q1 2020 Investor Letter, a copy of which you can download here. The Third Avenue Real Estate Value Fund posted a return of -28.83% for the quarter as compared to its benchmark, the FTSE EPRA NAREIT Developed Index which returned -28.34% (before fees) in the same quarter. You should check out Third Avenue Management’s top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash. There weren’t a lot of funds who could deliver these kinds of returns without shorting the market or using aggressive put options.
In the said letter, Third Avenue Management highlighted a few stocks and Lowe’s Companies Inc (NYSE:LOW) is one of them. Lowe’s is a retail company specializing in home improvement. Year-to-date, Lowe’s Companies Inc (NYSE:LOW) stock gained 8.5% and on June 15th it had a closing price of $127.73. Here is what Third Avenue Management said:
“Lowe’s is a multi-channel US-based home improvement retailer with approximately 2,200 stores throughout North America (more than 80% of which are owned). Held in the Fund before, the company continues to have a near duopoly position in the home improvement market (alongside Home Depot), which seems to be much-more internet resistant than other retail channels alongside significantly higher barriers-to-entry. While home improvement spending could very well pause aside higher levels of unemployment, Lowe’s is incredibly wellcapitalized with a net debt to asset ratio below 25%, a fixedcharge coverage ratio in excess of 8.0 times, and more than $10 billion of liquidity. As a result, it is not inconceivable that Lowe’s will continue to utilize its substantial free cash flow to further reduce its share count (nearly 50% of the shares have been retired over the past 10 years) while also strategically investing in its “professional customer” offering where there is a substantial opportunity to take further market share and make its existing store network more profitable (the professional customer accounts for 50% of the $900 billion market annually but only 20% of Lowe’s sales).”
In Q1 2020, the number of bullish hedge fund positions on Lowe’s Companies Inc (NYSE:LOW) stock decreased by about 8% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t seem to agree with Lowe’s growth potential. Our calculations showed that Lowe’s Companies Inc (NYSE:LOW) isn’t ranked among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
Video: Top 5 Stocks Among Hedge Funds
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. You can subscribe to our free enewsletter below to receive our stories in your inbox:
Disclosure: None. This article is originally published at Insider Monkey.
