Is Snap-on Incorporated (SNA) A Smart Long-Term Buy?

Ariel Investments, an investment management firm, published its “Ariel Fund”, “Ariel Appreciation Fund”, “Ariel Focus Fund”, “Ariel International Fund”, and “Ariel Global Fund” first-quarter 2021 investor letter – a copy of which can be downloaded here. A return of 19.50% was recorded by Ariel Fund for the first quarter of 2021, 15.65% by Ariel Appreciation Fund, 16.48% by  Ariel Focus Fund, 0.14% by Ariel International Fund, and 3.47% by Ariel Global Fund for the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Ariel Investments, in its Q1 2021 investor letter, mentioned Snap-on Incorporated (NYSE: SNA), and shared their insights on the company. Snap-on Incorporated is a Kenosha, Wisconsin-based manufacturing company that currently has a $13.7 billion market capitalization. Since the beginning of the year, SNA delivered a 48.78% return, extending its 12-month returns to 96.33%. As of May 28, 2021, the stock closed at $254.62 per share.

Here is what Ariel Investments has to say about Snap-on Incorporated in its Q1 2021 investor letter:

“Our largest holding, Snap-On, Inc.’s tool business faced clear short-term headwinds in March of 2020. Its auto-repair shop customers experienced a sharp drop in business given the -41% decline in miles driven from February to April. Fewer miles driven means fewer accidents, less wear and tear and therefore less business for auto mechanics. Investors feared repair shops would cut their purchases of Snap-On tools and diagnostic systems. And in the short-term, they did. In the second quarter of 2020 Snap-On’s operating profit slumped a sobering -39% from the same quarter a year prior. Their stock declined even more—falling from $170 in January 2020 to a low of $91 in March. We added to our position based upon our belief that the downturn in miles driven and automobile servicing was temporary and that demand for Snap-On’s tools would be just as strong post re-opening. The company rewarded our confidence, posting fourth quarter operating profits that were +22% above pre-Covid levels a year earlier. Its stock also more than doubled from its 2020 low to an all-time high of $231 as we go to print.”

Vince Clements/

Our calculations show that Snap-on Incorporated (NYSE: SNA) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the first quarter of 2021, Snap-on Incorporated was in 18 hedge fund portfolios, compared to 26 funds in the fourth quarter of 2020. SNA delivered a 25.36% 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.