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Hedge Fund Sentiment Is Stagnant On Valmont Industries, Inc. (VMI)

Hedge funds are not perfect. They have their bad picks just like everyone else. Micron, a stock hedge funds have loved, lost 50% during the last 12 months ending in October 30. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% in the same time period, vs. a gain of 5.2% for the S&P 500 Index. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of Valmont Industries, Inc. (NYSE:VMI).

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Valmont Industries, Inc. (NYSE:VMI) investors should be aware of a decrease in hedge fund sentiment lately.

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If you’d ask most shareholders, hedge funds are viewed as unimportant, outdated investment vehicles of yesteryear. While there are over 8000 funds in operation at the moment, Hedge fund experts at Insider Monkey hone in on the elite of this club, about 700 funds. It is estimated that this group of investors administers the lion’s share of the hedge fund industry’s total asset base, and by tailing their unrivaled investments, Insider Monkey has formulated a number of investment strategies that have historically surpassed Mr. Market. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points a year for a decade in their back tests.

Now, let’s view the recent action surrounding Valmont Industries, Inc. (NYSE:VMI).

What have hedge funds been doing with Valmont Industries, Inc. (NYSE:VMI)?

Heading into the fourth quarter, a total of 18 of the hedge funds tracked by Insider Monkey were bullish in this stock, unchanged over the quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who kept substantial stakes.

Of the funds tracked by Insider Monkey, Royce & Associates, managed by Chuck Royce, holds the number one position in Valmont Industries, Inc. (NYSE:VMI). Royce & Associates has a $140.3 million position in the stock, comprising 0.7% of its 13F portfolio. Sitting at the No. 2 spot is Makaira Partners, managed by Thomas Bancroft, which held a $78.9 million position; 12.8% of its 13F portfolio is allocated to the stock. Some other peers with similar optimism comprise Joel Greenblatt’s Gotham Asset Management, Cliff Asness’s AQR Capital Management and Ian Simm’s Impax Asset Management.

Let’s also examine hedge fund activity in other stocks similar to Valmont Industries, Inc. (NYSE:VMI). We will take a look at Standard Pacific Corp. (NYSE:SPF), Colony Financial Inc (NYSE:CLNY), Rice Energy Inc (NYSE:RICE), and Integra Lifesciences Holdings Corp (NASDAQ:IART). This group of stocks’ market values match VMI’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SPF 10 187709 -4
CLNY 36 593964 0
RICE 23 485092 -3
IART 19 134586 -3

As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $350 million. Valmont is less popular than most of these four stocks, which suggest that they might be a better alternative.

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