Black Bear Value Partners recently released its Q4 2020 Investor Letter, a copy of which you can download here. The fund posted a return of -6.5% (net) in 2020, underperforming its benchmark, the S&P 500 Index which returned 18.4% in the same period. You should check out Black Bear Value Partners’ top 5 stock picks for investors to buy right now, which could be the biggest winners of this year.
In the Q4 2020 Investor Letter, the fund highlighted a few stocks and Armstrong World Industries Inc (NYSE:AWI) is one of them. Armstrong World Industries Inc (NYSE:AWI) is an international designer and manufacturer of walls and ceilings. In the last three months, Armstrong World Industries Inc (NYSE:AWI) stock gained 19% and on March 11th it had a closing price of $93.47. Here is what the fund said:
“AWI is a 129-year old designer and manufacturer of commercial and residential ceiling, wall, and suspension systems. 95% of their sales are for commercial use with the majority (70%) for repair and remodel (R&R). This translates to less sensitivity to new construction as R&R is a more stable revenue stream.
The US ceiling industry is consolidated with the top 3 companies controlling 98% of the market. AWI is the market leader with 65% market share. Because of a large previously installed base and exclusive distributor relationships, they’ve been able to increase pricing in the 5+% range annually.
AWI should be able to generate $4-$5 in annual free cash flow which implies a current yield of 5-6% that should be able to grow 5-7% per year over the long-run. This is an excellent business at a cheap price.”
PI/Shutterstock.com
Earlier this month, we published an article revealing that Armstrong World Industries Inc (NYSE:AWI) was one of the 10 best manufacturing stocks to buy now.
In Q3 2020, the number of bullish hedge fund positions on Armstrong World Industries Inc (NYSE:AWI) stock decreased by about 12% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t believe in AWI’s growth potential. Our calculations showed that Armstrong World Industries Inc (NYSE:AWI) isn’t ranked among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 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. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best innovative stocks to buy to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website:
Disclosure: None. This article is originally published at Insider Monkey.
