Is Advanced Drainage Systems (WMS) A Smart Long-Term Buy?

Artisan Partners, a high value-added investment management firm, published its ‘Artisan Small Cap Fund’ first quarter 2021 investor letter – a copy of which can be downloaded here. A return of -5.02% was recorded by its Investor Class: ARTSX, -4.99% by its Advisor Class: APDSX, and -4.95% by its Institutional Class: APHSX for the fourth quarter of 2020, all below the Russell 2000® Growth Index that delivered a 4.88% return and the Russell 2000® Index that was up by 12.70% for the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Artisan Small Cap Fund, in its Q1 2021 investor letter, mentioned Advanced Drainage Systems, Inc. (NYSE: WMS), and shared their insights on the company. Advanced Drainage Systems, Inc. is a Hilliard, Ohio-based plastics pipe company that currently has a $7.7 billion market capitalization. Since the beginning of the year, WMS delivered a 31.32% return, extending its 12-month gains to 161.52%. As of May 18, 2021, the stock closed at $109.76 per share.

Here is what Artisan Small Cap Fund has to say about Advanced Drainage Systems, Inc. in its Q1 2021 investor letter:

Advanced Drainage Systems is a leader (60%-70% market share) in plastic-pipe drainage systems for non-residential, residential, agriculture and public infrastructure projects. The company’s products are used in the full storm-water drainage system— capturing, transporting, treating and redistributing water into the water table. Further, plastic-pipe systems are easier to install, have a longer useful life and require fewer deliveries to the project sites than traditional concrete pipe systems. Our research suggests a relatively new management team is taking the appropriate steps to enter new markets and expand its product/service offerings by providing higher-performance pipes and a more comprehensive suite of products for its infrastructure, residential and distribution center (Amazon, Walmart, etc.) projects. Furthermore, we expect a cyclical acceleration will magnify this company’s execution over the past three years, and several operational initiatives—sourcing lower-cost materials, optimizing machine utilization, automation—should improve margins over time.”



Our calculations show that Advanced Drainage Systems, Inc. (NYSE: WMS) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Advanced Drainage Systems, Inc. was in 25 hedge fund portfolios. WMS delivered a 13.06% return in the past 3 months.

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.

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