Should You Hold a Short Position in Mueller Industries (MLI)?

Diamond Hill Capital, an investment management company, released its “Long-Short Fund” third-quarter 2023 investor letter. A copy of the same can be downloaded here. The positive returns of the portfolio outperformed the Russell 1000 Index and the blended benchmark (60% Russell 1000 Index/40% Bloomberg US Treasury Bills 1-3 Month Index), both of which were negative in Q3. The short book trailed the index, providing a relative tailwind to performance. Long financial holdings were another source of relative strength. On the other hand, the fund’s long industrials and healthcare holdings were sources of relative weakness in Q3. In addition, you may look at the fund’s top 5 holdings to learn about its best picks in 2023.

Diamond Hill Long-Short Fund highlighted stocks like Mueller Industries, Inc. (NYSE:MLI) in the third quarter 2023 investor letter. Headquartered in Collierville, Tennessee, Mueller Industries, Inc. (NYSE:MLI) is a manufacturer of copper, brass, aluminum, and plastic products. On December 20, 2023, Mueller Industries, Inc. (NYSE:MLI) stock closed at $46.05 per share. One-month return of Mueller Industries, Inc. (NYSE:MLI) was 12.81%, and its shares gained 53.09% of their value over the last 52 weeks. Mueller Industries, Inc. (NYSE:MLI) has a market capitalization of $5.228 billion.

Diamond Hill Long-Short Fund made the following comment about Mueller Industries, Inc. (NYSE:MLI) in its Q3 2023 investor letter:

“We also initiated short positions in Mueller Industries, Inc. (NYSE:MLI), Bank of Hawaii, Alarm.com Holdings and Garmin in Q3. Mueller Industries is a leading producer of copper tubes and pipes for plumbing and HVAC systems — a cyclical industry with largely commoditized products that has seen meaningful margin gains in recent years tied to tailwinds we anticipate will likely reverse in coming years. Further, we expect long-term volume trends will likely remain sluggish as copper piping continues losing share to plastic over time. Given our expectation earnings power will revert to historical levels over time, we initiated a short position during the quarter.”

A worker welding a pipe joint in a metal fabrication facility.

Mueller Industries, Inc. (NYSE:MLI) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 21 hedge fund portfolios held Mueller Industries, Inc. (NYSE:MLI) at the end of third quarter which was 24 in the previous quarter.

We discussed Mueller Industries, Inc. (NYSE:MLI) in another article and shared the top stock picks of Mario Gabelli. In addition, please check out our hedge fund investor letters Q3 2023 page for more investor letters from hedge funds and other leading investors.

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 Disclosure: None. This article is originally published at Insider Monkey.