We recently published a list of Top 10 Stocks to Buy According to XN Exponent Advisors LLC. In this article, we are going to take a look at where The Sherwin-Williams Company (NYSE:SHW) stands against other top stocks to buy according to XN Exponent Advisors LLC.

Established in 2018 by Gaurav Kapadia, XN Exponent Advisors LLC is based in New York and manages approximately $2.53 billion in 13F securities according to its latest filing for the fourth quarter of 2024. With just 13 clients, the hedge fund maintains a concentrated portfolio, with its top ten holdings accounting for 69.02% of its total assets. XN employs a global investment strategy that spans both public and private markets, focusing on generating high risk-adjusted returns. The firm targets sectors where it has deep expertise while deliberately avoiding balance sheet-heavy industries such as financials, healthcare, energy, and materials.

The firm primarily invests in North America and Western Europe but remains open to opportunities in other regions that align with its strategic goals. XN’s investment approach is built around a long/short strategy, where it seeks to capitalize on market inefficiencies by purchasing undervalued assets and shorting overvalued ones. This method hinges on the firm’s ability to assess market opportunities accurately, though there is no guarantee of success. Market disruptions pose a significant risk, as they can result in substantial losses and may force XN to close out client positions to mitigate damage.

A key feature of XN’s approach is its flexibility. Unlike traditional investment firms bound by rigid diversification or leverage policies, XN can trade across a wide range of securities, issuers, countries, and sectors to align with its investment objectives. This adaptability enables the firm to respond quickly to shifting market conditions, reallocating client assets as necessary. While this strategy offers significant potential for high returns, it also carries inherent risks, particularly in volatile market environments. However, XN’s focus on specialized knowledge and strategic positioning aims to maximize opportunities while managing downside exposure.

Founder and Chief Executive Officer of XN, Gaurav Kapadia has nearly two decades of experience in public and private markets and has built a reputation as a visionary investor and business leader. Before launching XN, a firm whose name reflects the power of long-term compounding, Kapadia was the Co-Founder and Co-Managing Partner of Soroban Capital Partners, a globally recognized investment firm. Prior to that, he served as a Partner at TPG-Axon Capital, working in both New York and London. His extensive expertise in finance and investing is rooted in his academic background; he earned a Bachelor of Science in Economics from the Wharton School at the University of Pennsylvania in 1999.

Beyond his financial career, Kapadia is deeply committed to philanthropy and civic engagement, particularly in the arts, humanities, education, and social equity. In September 2023, the Mellon Foundation announced his election to its Board of Trustees, recognizing his dedication to supporting cultural and educational initiatives. He has been a strong proponent of the transformative power of art and the humanities, emphasizing their role in fostering positive societal change. Under the leadership of Mellon Foundation President Elizabeth Alexander, Kapadia expressed his excitement to contribute to the organization’s mission, citing its precision and ambitious vision as key reasons for his involvement.

Kapadia also serves on the Boards of Trustees for several influential institutions, including The Whitney Museum of American Art, The Trust for Governors Island, Uncommon Schools, and The Institute for Constitutional Advocacy and Protection at Georgetown University Law Center. His advocacy for education, civic engagement, and equality underscores his commitment to creating meaningful opportunities for underserved communities. Through his leadership in both finance and philanthropy, Kapadia continues to bridge the worlds of business and social impact, demonstrating how strategic investments—whether in financial markets or cultural institutions—can drive long-term positive change.

Our Methodology

The stocks discussed below were picked from XN Exponent Advisors LLC’s Q4 2024 13F filings. They are compiled in the ascending order of the hedge fund’s stake in them as of December 31, 2024. To assist readers with more context, we have included the hedge fund sentiment regarding each stock using data from 1009 hedge funds tracked by Insider Monkey in the fourth quarter of 2024.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

The Sherwin-Williams Company (NYSE:SHW)

Number of Hedge Fund Holders as of Q4: 74

XN Exponent Advisors LLC’s Equity Stake: $129.80 Million 

The Sherwin-Williams Company (NYSE:SHW), a leading global paints and coatings company, continues to refine its operations and workforce structure while maintaining strong financial performance. Sherwin-Williams reported record financial results for 2024, with consolidated net sales reaching $23.10 billion, reflecting stable growth in its Paint Stores Group and key industrial segments. The company achieved a 14.1% increase in diluted net income per share to $10.55, with an adjusted figure of $11.33, marking a 9.5% rise year-over-year. Fourth-quarter earnings saw even stronger gains, with a 36.7% increase in diluted net income per share to $1.90 and a 15.5% rise in adjusted earnings to $2.09. Gross margin expanded by 180 basis points to 48.5%, supported by a high-single-digit increase in residential repaint sales and above-market growth in new residential projects. Industrial coatings also performed well, with double-digit growth in packaging coatings and positive momentum in coil coatings.

The Sherwin-Williams Company (NYSE:SHW) continues to prioritize shareholder value, generating $3.15 billion in net operating cash and returning $2.46 billion to shareholders through dividends and share repurchases. With authorization remaining to repurchase 34.4 million shares, the company remains committed to strengthening its financial position while investing in growth opportunities. Looking ahead, The Sherwin-Williams Company (NYSE:SHW) forecasts 2025 diluted net income per share in the range of $10.70 to $11.10, with an adjusted range of $11.65 to $12.05. CEO Heidi G. Petz emphasized the company’s resilience in navigating demand fluctuations and reaffirmed its strategy of driving above-market growth while maintaining financial discipline.

In a strategic move to streamline management and improve efficiency, The Sherwin-Williams Company (NYSE:SHW) recently announced a voluntary buyout program for select employees. This initiative follows broader organizational changes aimed at simplifying corporate structures and optimizing the supervisor-to-employee ratio. The company’s leadership emphasized that these changes are part of an ongoing effort to reduce complexity and enhance operational effectiveness.

With a continued focus on operational efficiency, financial strength, and strategic investments, The Sherwin-Williams Company (NYSE:SHW) is well-positioned for long-term success and is a top stock to buy according to XN Exponent Advisors LLC.

Aoris Investment Management stated the following regarding The Sherwin-Williams Company (NYSE:SHW) in its Q4 2024 investor letter:

“Lastly, we bought The Sherwin-Williams Company (NYSE:SHW), which is the world’s largest paint and coatings company. Yes, paint does sound dull, but Sherwin-Williams excels at serving demanding customers with often highly technical products. In the US market for professional painters, Sherwin-Williams has a share around 10x the size of its closest peer. It also has exclusive supply arrangements with 23 of the 25 largest home builders in the US. Remarkably, given its dominant position, its market share continues to rise.”

Overall, SHW ranks 8th on our list of top stocks to buy according to XN Exponent Advisors LLC. While we acknowledge the potential for SHW as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SHW but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires

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