Pershing Square Capital Management, an investment management firm, published its fourth-quarter 2021 investor letter – a copy of which can be downloaded here. An annual portfolio net return of 26.9% was recorded by the fund for the whole year of 2021, versus the S&P 500 Index, the FTSE 100, and MSCI World Index that delivered a 28.7%, 17.4%, and 22.3% return respectively for the same period. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
Pershing Square Capital Management, in its Q4 2021 investor letter, mentioned Lowe’s Companies, Inc. (NYSE: LOW) and discussed its stance on the firm. Lowe’s Companies, Inc. is a Mooresville, North Carolina-based retail company with a $150.0 billion market capitalization. LOW delivered a -13.85% return since the beginning of the year, while its 12-month returns are up by 25.43%. The stock closed at $222.69 per share on February 19, 2022.
Here is what Pershing Square Capital Management has to say about Lowe’s Companies, Inc. in its Q4 2021 investor letter:
“Lowe’s is a high-quality business with significant long-term earnings growth potential
Supportive macroeconomic backdrop
-Aging housing stock, lack of new inventory, robust home equity values, and unprecedented pro project backlog
-COVID-19 causing millennials to enter the housing marketPositioned to grow EPS largely independent of market conditions
-Idiosyncratic revenue opportunities driving share gains
-Self-help initiatives catalyzing operating margin expansion
-Buybacks representing ~8% of current market capitalization planned for 2022Multi-year business transformation with substantial earnings upside
-Margin target of 13% has substantial upside; Home Depot at ~15.3% and increasing
-Potential to generate high-teens EPS growth over the next several years.Lowe’s continues to trade at a significantly discounted P/E multiple relative to Home Depot despite materially higher prospective EPS growth. LOW’s share price including dividends increased 63% in 2021 and has decreased 10% year-to-date in 2022.”
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Our calculations show that Lowe’s Companies, Inc. (NYSE: LOW) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. LOW was in 72 hedge fund portfolios at the end of the third quarter of 2021, compared to 60 funds in the previous quarter. Lowe’s Companies, Inc. (NYSE: LOW) delivered a -10.75% return in the past 3 months.
In September 2021, we also shared another hedge fund’s views on LOW in another article. You can find other letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.
Disclosure: None. This article is originally published at Insider Monkey.
