Is Vulcan Materials Company (VMC) A Bargain According To Hedge Funds?

Is Vulcan Materials Company (NYSE:VMC) a bargain? Money managers are buying. The number of bullish hedge fund bets went up by 6 lately. Our calculations also showed that VMC isn’t among the 30 most popular stocks among hedge funds.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Ricky Sandler, Eminence Capital

Let’s check out the recent hedge fund action encompassing Vulcan Materials Company (NYSE:VMC).

How have hedgies been trading Vulcan Materials Company (NYSE:VMC)?

Heading into the first quarter of 2019, a total of 41 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from one quarter earlier. On the other hand, there were a total of 38 hedge funds with a bullish position in VMC a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.


Among these funds, Egerton Capital Limited held the most valuable stake in Vulcan Materials Company (NYSE:VMC), which was worth $288 million at the end of the third quarter. On the second spot was Eminence Capital which amassed $201 million worth of shares. Moreover, Citadel Investment Group, Soroban Capital Partners, and Adage Capital Management were also bullish on Vulcan Materials Company (NYSE:VMC), allocating a large percentage of their portfolios to this stock.

With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Egerton Capital Limited, managed by John Armitage, initiated the most valuable position in Vulcan Materials Company (NYSE:VMC). Egerton Capital Limited had $288 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also initiated a $57.6 million position during the quarter. The other funds with new positions in the stock are Daniel Sundheim’s D1 Capital Partners, Anand Parekh’s Alyeska Investment Group, and Stephen J. Errico’s Locust Wood Capital Advisers.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Vulcan Materials Company (NYSE:VMC) but similarly valued. These stocks are Liberty Broadband Corp (NASDAQ:LBRDA), Magellan Midstream Partners, L.P. (NYSE:MMP), Weibo Corp (NASDAQ:WB), and MSCI Inc (NYSE:MSCI). This group of stocks’ market caps are closest to VMC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LBRDA 19 498774 -3
MMP 12 86141 -2
WB 17 349440 -6
MSCI 38 594822 2
Average 21.5 382294 -2.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.5 hedge funds with bullish positions and the average amount invested in these stocks was $382 million. That figure was $1535 million in VMC’s case. MSCI Inc (NYSE:MSCI) is the most popular stock in this table. On the other hand Magellan Midstream Partners, L.P. (NYSE:MMP) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Vulcan Materials Company (NYSE:VMC) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Hedge funds were also right about betting on VMC, though not to the same extent, as the stock returned 14.3% and outperformed the market as well.

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