What Smart Money Thinks about Valmont Industries, Inc. (VMI)

Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.

Is Valmont Industries, Inc. (NYSE:VMI) a buy here? Money managers are actually turning less bullish. The number of long hedge fund positions that are disclosed in regulatory 13F filings was trimmed by two in recent months. In this way, there were 21 hedge funds in our database with VMI holdings at the end of September. At the end of this article we will also compare VMI to other stocks, including Avis Budget Group Inc. (NASDAQ:CAR), Education Realty Trust, Inc. (NYSE:EDR), and NorthWestern Corp (NYSE:NWE) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

How have hedgies been trading Valmont Industries, Inc. (NYSE:VMI)?

Heading into the fourth quarter of 2016, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, which represents a fall of 9% from the end of the second quarter. By comparison, 17 hedge funds held shares or bullish call options in VMI heading into 2016. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Royce & Associates, led by Chuck Royce, holds the largest position in Valmont Industries, Inc. (NYSE:VMI). Royce & Associates has a $110.5 million position in the stock. Sitting at the No. 2 spot is Thomas Bancroft’s Makaira Partners, with a $89.1 million position; the fund has 13.5% of its 13F portfolio invested in the stock. Some other peers that hold long positions encompass Jim Simons’ Renaissance Technologies, Cliff Asness’ AQR Capital Management and Ken Griffin’s Citadel Investment Group. We should note that Makaira Partners is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

We already know that not all hedge funds are bullish on the stock and some hedge funds actually said goodbye to their positions entirely. It’s worth mentioning that Joel Greenblatt’s Gotham Asset Management said goodbye to the largest position of the “upper crust” of funds tracked by Insider Monkey, valued at about $2.6 million in stock, and Matthew Tewksbury’s Stevens Capital Management was right behind this move, as the fund dropped about $2.1 million worth of shares.

Let’s now take a look at hedge fund activity in other stocks similar to Valmont Industries, Inc. (NYSE:VMI). These stocks are Avis Budget Group Inc. (NASDAQ:CAR), Education Realty Trust, Inc. (NYSE:EDR), NorthWestern Corp (NYSE:NWE), and American National Insurance Company (NASDAQ:ANAT). This group of stocks’ market values are similar to VMI’s market value.

As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $322 million. That figure was $341 million in VMI’s case. Avis Budget Group Inc. (NASDAQ:CAR) is the most popular stock in this table. On the other hand NorthWestern Corp (NYSE:NWE) is the least popular one with only 6 bullish hedge fund positions. Valmont Industries, Inc. (NYSE:VMI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard Avis Budget Group Inc. (NASDAQ:CAR) might be a better candidate to consider taking a long position in.

Disclosure: None