Is WD-40 Company (WDFC) A Smart Long-Term Buy?

Polen Capital, an investment management firm, published its “Polen U.S. Small Company Growth” first quarter 2021 investor letter – a copy of which can be downloaded here. A return of 0.99% was delivered by the fund for the first quarter of 2021, trailing its Russell 2000 Growth benchmark that delivered a 4.87% gain for the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Polen U.S. Small Company Growth Fund, in its Q1 2021 investor letter, mentioned WD-40 Company (NASDAQ: WDFC), and shared their insights on the company. WD-40 Company is a California-based rocket chemical company that currently has a $3.3 billion market capitalization. Since the beginning of the year, WDFC delivered a -8.84% return, while its 12-month gains are up by 30.13%. As of May 21, 2021, the stock closed at $242.20 per share.

Here is what Polen U.S. Small Company Growth Fund has to say about WD-40 Company in its Q1 2021 investor letter:

WD-40 Company was a top contributor during the quarter. WD40’s primary product is the near-ubiquitous blue and yellow can of lubricant found in households around the world. WD-40 was one of the fortunate businesses that saw a substantial increase in demand for its product during the pandemic. The company is dubbing the phenomenon as ‘isolation renovation’ which reflects the increase in DIY and home improvement projects done while people were stuck at home. Not surprisingly, the company saw growth in the most recent quarter with outsized growth in its ecommerce channel. However, because the average DIY user only needs to replace the product every few years, we were concerned about a pull-forward in demand that might lead to slower growth going forward. We have exited our position to reinvest client capital in potential higher-return opportunities, as detailed below.”



Our calculations show that WD-40 Company (NASDAQ: WDFC) 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, WD-40 Company was in 14 hedge fund portfolios, compared to 15 funds in the fourth quarter of 2020. WDFC delivered a -22.66% 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.