Linde (LIN) Has Risen 23% in Last One Year, Outperforms Market

If you are looking for the best ideas for your portfolio you may want to consider some of VGI Partners top stock picks. VGI Partners, an investment management firm, is bullish on Linde Plc (NYSE:LIN) stock. In its FY 2019 investor letter – you can download a copy here – the firm discussed its investment thesis on Linde Plc (NYSE:LIN) stock. Linde Plc (NYSE:LIN) is a chemical company.

On July 30, 2019, VGI Partners had released its FY 2019 investor letter. Linde Plc (NYSE:LIN) stock has posted a return of 22.8% in the trailing one year period, outperforming the S&P 500 Index which returned 12.5% in the same period. This suggests that the investment firm was right in its decision. On a year-to-date basis, Linde Plc (NYSE:LIN) stock has risen by 11.8%.

In its FY 2019 investor letter, the firm reported that VGI Partners Global Investments Limited generated a 10.2% net return. Let’s take a look at comments made by VGI Partners about Linde Plc (NYSE:LIN) stock in the Q2 2019 investor letter.

“Linde plc (NYSE: LIN) contributed +1.3% to performance for the twelve months to 30 June 2019, with the share price increasing 27.0% over the course of the year.

Linde plc is the result of a merger between two of the big four industrial gas providers, Praxair Inc. and Linde AG. The merger closed in March 2019 and the combined business, Linde plc, is now the largest industrial gas player in the world, further consolidating an already highly concentrated industrial gas industry.

We believe a number of factors make the industrial gas industry an attractive investment. The product is a fraction of their customers’ total cost base but an essential input, providing substantial pricing power. Industrial gas facilities require substantial initial capital requirements and often it will take three years to see any return on this investment. The industry has very long-term contracts with ‘Take or Pay’ provisions, improving earnings visibility. In addition, the industry has a highly consolidated market structure, with the top three players holding ~80% of the global market. Finally, the industry tends to form regional monopolies, as production must occur within 200km of the end customer.

We have been Praxair shareholders for many years as, in addition to the above factors, Praxair has a very high-quality, long term focused management team who are aligned with shareholders as a result of their substantial shareholding.

This Praxair management team is, as of March, in control of the merged business and we believe their best-in-class execution combined with Linde AG’s assets will result in significant pricing opportunities and margin improvement over the coming years.”

In Q2 2020, the number of bullish hedge fund positions on Linde Plc (NYSE:LIN) stock decreased by about 2% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t seem to agree with Linde’s growth potential. Our calculations showed that Linde Plc (NYSE:LIN) isn’t ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 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

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. You can subscribe to our free enewsletter below to receive our stories in your inbox:

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