Longleaf Partners Fund, a Memphis-based fund under Southeastern Asset Management, recently released its Q4 2020 Investor Letter, a copy of which you can download here. The fund posted a return of 22.75% for the quarter, outperforming its benchmark, the S&P 500 Index which returned 12.15% in the same quarter. You should check out Longleaf Partners’ top 5 stock picks for investors to buy right now, which could be the biggest winners of 2021.
In the Q4 2020 Investor Letter, the fund highlighted a few stocks and CNH Industrial N.V. (NYSE:CNHI) is one of them. CNH Industrial N.V. (NYSE:CNHI) is a farm machinery and equipment company. In the last three months, CNH Industrial N.V. (NYSE:CNHI) stock gained 22.4% and on March 30th it had a closing price of $15.79. Here is what the fund said:
“CNH Industrial (CNH) (15%, 0.76%; 63%, 3.24%), one of the world’s largest agriculture machinery manufacturers, was another top contributor for the quarter, taking it into positive territory for the year. CNH started off the year with the worse-than-expected first quarter results caused by COVID-related demand disruption and production shutdowns starting in March. Margins across all segments were down primarily due to operating deleverage and cash flows deteriorating as sales and EBITDA collapsed, exacerbating the working capital drain. However, CNH showed strong sequential improvements, posting strong 2Q and 3Q results which far exceeded market consensus and management’s initial conservative outlook. During the last quarter, industrial sales grew 4% year-over-year, compared to the market expectation of a 15% decline. The Agricultural Equipment business, which represents the majority of our appraisal value, showed its resiliency by posting a constant currency growth of 14% year-over-year. Despite the initial concerns on inventory buildup, CNH made significant progress by lowering its channel inventory by 35% in the quarter. Additionally, the order book grew double-digits, ending the year in a position of strength. Free cash flow has improved significantly from US$-1.5 billion in 1Q to US$1 billion in 3Q, driven by end market demand recovery, working capital reduction and prudent cash preservation measures. The company recently issued notes at very favorable rates, ensuring it has ample liquidity. We welcome the appointment of Scott Wine as CEO. He joins from Polaris, where he had a strong track record of compounding shareholder returns and encouraging employee ownership. CNH publicly reiterated Wine’s commitment to delivering on the previously-announced split of the business into a pureplay Ag/Construction company and a commercial vehicle/powertrain company.”
Pixabay/Public Domain
Earlier this month, we published an article revealing that CNH Industrial N.V. (NYSE:CNHI) was one of the 10 most profitable agricultural business ideas in 2021.
In Q3 2020, the number of bullish hedge fund positions on CNH Industrial N.V. (NYSE:CNHI) stock increased by about 6% from the previous quarter (see the chart here), so a number of other hedge fund managers believe in CNHI’s growth potential. Our calculations showed that CNH Industrial N.V. (NYSE:CNHI) isn’t ranked among the 30 most popular stocks among hedge funds.
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.
