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Valmont Industries, Inc. (VMI): Hedge Funds In Wait-and-See Mode

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Valmont Industries, Inc. (NYSE:VMI).

Hedge fund interest in Valmont Industries, Inc. (NYSE:VMI) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare VMI to other stocks including Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH), Kohl’s Corporation (NYSE:KSS), and UMB Financial Corporation (NASDAQ:UMBF) to get a better sense of its popularity.

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the eyes of most market participants, hedge funds are assumed to be unimportant, outdated financial tools of years past. While there are more than 8000 funds with their doors open at the moment, Our experts hone in on the bigwigs of this club, about 850 funds. These money managers manage the lion’s share of all hedge funds’ total asset base, and by keeping track of their best picks, Insider Monkey has spotted many investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Donald Yacktman of Yacktman Asset Management

We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a look at the new hedge fund action surrounding Valmont Industries, Inc. (NYSE:VMI).

How have hedgies been trading Valmont Industries, Inc. (NYSE:VMI)?

At the end of the first quarter, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 19 hedge funds with a bullish position in VMI a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

Is VMI A Good Stock To Buy?

More specifically, Impax Asset Management was the largest shareholder of Valmont Industries, Inc. (NYSE:VMI), with a stake worth $107.2 million reported as of the end of September. Trailing Impax Asset Management was Royce & Associates, which amassed a stake valued at $34.1 million. Nitorum Capital, Harvey Partners, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Harvey Partners allocated the biggest weight to Valmont Industries, Inc. (NYSE:VMI), around 8.04% of its 13F portfolio. Nitorum Capital is also relatively very bullish on the stock, earmarking 2.29 percent of its 13F equity portfolio to VMI.

Because Valmont Industries, Inc. (NYSE:VMI) has experienced bearish sentiment from hedge fund managers, logic holds that there was a specific group of fund managers who sold off their entire stakes heading into Q4. Intriguingly, Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC cut the largest stake of all the hedgies tracked by Insider Monkey, valued at about $2.7 million in stock. Joel Greenblatt’s fund, Gotham Asset Management, also cut its stock, about $2.3 million worth. These bearish behaviors are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Valmont Industries, Inc. (NYSE:VMI) but similarly valued. We will take a look at Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH), Kohl’s Corporation (NYSE:KSS), UMB Financial Corporation (NASDAQ:UMBF), and Alkermes Plc (NASDAQ:ALKS). This group of stocks’ market values are similar to VMI’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DCPH 28 603787 0
KSS 26 145325 -2
UMBF 15 46125 -4
ALKS 30 509143 -3
Average 24.75 326095 -2.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.75 hedge funds with bullish positions and the average amount invested in these stocks was $326 million. That figure was $219 million in VMI’s case. Alkermes Plc (NASDAQ:ALKS) is the most popular stock in this table. On the other hand UMB Financial Corporation (NASDAQ:UMBF) is the least popular one with only 15 bullish hedge fund positions. Valmont Industries, Inc. (NYSE:VMI) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and surpassed the market by 14.2 percentage points. Unfortunately VMI wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); VMI investors were disappointed as the stock returned 8.5% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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