Is Spectrum Brands Holdings (SPB) a Smart Long-term Buy?

Heartland Mid Cap Value Fund recently released its third-quarter investor letter – a copy of which is available for download here. The fund posted a return of 3.1% for the quarter, underperforming its benchmark, the Russell Midcap Value Index which returned 6.4% in the same quarter. You should check out Heartland’s top 5 stock picks for investors to buy right now, which could be the biggest winners of 2021.

In the Q3 2020 Investor Letter, Heartland Advisors highlighted a few stocks and Spectrum Brands Holdings Inc. (NYSE:SPB) is one of them. Spectrum Brands Holdings Inc. (NYSE:SPB) is a consumer product company. Year-to-date, Spectrum Brands Holdings Inc. (NYSE:SPB) stock gained 14.6% and on December 18th it had a closing price of $73.68. Here is what Heartland Advisors said:

“While investors spent much of the period bidding up businesses based on sales growth expectations, the portfolio reaped the benefits of some holdings that were driving an improved outlook through self-help measures. Spectrum Brands Holdings (SPB), a household products company, is one such example.

Spectrum sells a variety of home goods through its market-leading brands including Kwikset, Black and Decker, Pfister and Remington. Of the company’s $3.8 billion in annual sales, roughly 80% are driven by its top 15 brands. During the past 18 months, management has undertaken an initiative to exit non-core business lines such as auto care and batteries, reduce debt and improve efficiency. These efforts have begun to produce results and sales figures have exceeded expectations during the COVID downturn.

We believe Spectrum is in the early innings of its transformation and should also see continued organic sales growth as it invests proceeds form divestitures into its business. Despite recent improvements in its share price, the company still trades at meaningful discount to its peers on an enterprise value/earnings before interest, taxes, depreciation and amortization basis.”

Pixabay/Public Domain

In Q2 2020, the number of bullish hedge fund positions on Spectrum Brands Holdings Inc. (NYSE:SPB) stock increased by about 8% from the previous quarter (see the chart here), so a number of other hedge fund managers believe in SPB’s growth potential. Our calculations showed that Spectrum Brands Holdings Inc. (NYSE:SPB) isn’t ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 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. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

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