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Government Demand for Utility Services, Likely for the Advantage of Alamo Group (ALG)

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Jose Karlo Mari Tottoc
·3 min read
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Third Avenue Management, a disciplined, value-oriented asset manager and investment fund, published its ‘Small-Cap Value Fund’ third-quarter 2020 Investor Letter – a copy of which can be downloaded here. A return of 11.41% was recorded by the fund for the 3rd Quarter of 2020, below its Russell 2000 Value benchmark that returned 18.91%. You can view the fund’s top 10 holdings to have a peek at their top bets for 2021.

Third Avenue Management in their Small-Cap Value Fund’s Q3 2020 Investor Letter said that future scenarios are likely to benefit Alamo Group Inc. (NYSE: ALG) and so they continue to have bullish projections for the company. Alamo Group Inc. is an agriculture and infrastructure equipment manufacturer company that currently has a $1.8 billion market cap. For the past 3 months, Alamo Group Inc. delivered a 28.87% return and settled at $151.50 per share at the closing of January 15th.

Here is what Third Avenue Management has to say about Alamo Group Inc. in their Investor Letter:

"Another long-time Fund holding, Alamo Group, derives a majority of its revenues from state and local governments. Even though its products cater to basic government services (street sweeping, snow removal, roadside mowing, etc.), these products need to be replaced frequently. There is a groundswell of support to replenish state and local government coffers after surpluses were drained due to COVID-19. Alamo would be a beneficiary if and when this occurs."

Rrrainbow / Shutterstock.com

Last December 2020, we published an article telling that Alamo Group Inc. (NYSE: ALG) was in 9 hedge funds’ portfolio. Its all time high statistics is 15. Alamo Group Inc. delivered a 9.82% return YTD.

As of September 2020, Third Avenue Management had a 46K share position in ALG that amounted to $5 million. This made Third Avenue Management as the top 2 hedge fund that holds most of ALG’s stake, just below Longview Asset Management with $147 million worth of ALG shares. However, our calculations showed that Alamo Group Inc. (NYSE: ALG) does not belong to the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 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 scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website.

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