Is Caterpillar (CAT) a Smart Long-Term Buy?

Diamond Hill Capital, an investment management firm, published its “Diamond Hill Large Cap Concentrated Fund” first-quarter 2022 investor letter – a copy of which can be downloaded here. During a volatile quarter, Diamond Hill Large Cap Concentrated Fund performed roughly in line with the Russell 1000 Index. The market environment in Q1 provided a meaningful opportunity for us to initiate positions in high-quality names. From current levels, equity market returns over the next five years are likely to be below historical averages. Try to take some time looking at the fund’s top 5 holdings to be informed about their best picks for 2022.

In its Q1 2022 investor letter, Diamond Hill Large Cap Concentrated Fund mentioned Caterpillar Inc. (NYSE:CAT) and explained its insights for the company. Founded in 1925, Caterpillar Inc. (NYSE:CAT) is a Deerfield, Illinois-based construction machinery and equipment company with a $90.6 billion market capitalization. Caterpillar Inc. (NYSE:CAT) delivered a -17.80% return since the beginning of the year, while its 12-month returns are down by -18.28%. The stock closed at $169.94 per share on July 14, 2022.

Here is what Diamond Hill Large Cap Concentrated Fund has to say about Caterpillar Inc. (NYSE:CAT) in its Q1 2022 investor letter:

“We also initiated a position in Caterpillar (NYSE:CAT), one of the world’s leading manufacturers of construction and mining equipment. It’s a company we know well, as we have owned it in our large cap portfolio for quite some time. Recent share price weakness provided an opportunity for us to add it to our large cap concentrated portfolio at an attractive discount to our estimate of intrinsic value. We believe Caterpillar stands to benefit from increased capital investment supported by a healthier/recovering end market environment, particularly in construction and mining.”

Our calculations show that Caterpillar Inc. (NYSE:CAT) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Caterpillar Inc. (NYSE:CAT) was in 54 hedge fund portfolios at the end of the first quarter of 2022, compared to 53 funds in the previous quarter. Caterpillar Inc. (NYSE:CAT) delivered a -25.40% return in the past 3 months.

In August 2021, we also shared another hedge fund’s views on Caterpillar Inc. (NYSE:CAT) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.

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