Should You Invest in nVent Electric plc (NVT)?
Upslope Capital Management, an investment management firm, released its fourth-quarter 2023 investor letter. A copy of the same can be downloaded here. Considering Upslope’s regular defensive approach, Q4 was unusual. The fund returned +15.8% (net) in Q4 compared to +11.5% and +3.6% for the S&P Midcap 400 ETF (MDY) and HFRX Equity Hedge Index, respectively. For the full year, the fund’s return was +12.4% (net) compared to +16.1% and +6.9%, respectively for the indexes. In addition, you can check the top 5 holdings of the fund to know its best picks in 2023.
Upslope Capital Management featured stocks such as nVent Electric plc (NYSE:NVT) in the fourth quarter 2023 investor letter. Headquartered in London, the United Kingdom, nVent Electric plc (NYSE:NVT) engages in the design, production, and distribution of electrical connection and protection products. On January 12, 2024, NVent Electric plc (NYSE:NVT) stock closed at $56.26 per share. One-month return of NVent Electric plc (NYSE:NVT) was -3.47%, and its shares gained 41.57% of their value over the last 52 weeks. NVent Electric plc (NYSE:NVT) has a market capitalization of $9.334 billion.
Upslope Capital Management stated the following regarding NVent Electric plc (NYSE:NVT) in its fourth quarter 2023 investor letter:
"NVent Electric plc (NYSE:NVT) is a leading supplier of electrical protection and connection components and systems. The company was originally spun out of Pentair in 2018. NVT is an inherently attractive business because it holds mostly dominant or leading market share positions for products with a high cost of failure and a relatively low overall cost to customers. This provides customer stickiness and real pricing power when needed. While macro-sensitive, the company is unusually well positioned today as a clear beneficiary of the IRA (Inflation Reduction Act) specifically, as well as the more general trends of reshoring and electrification. While the current up-cycle won’t last forever, NVT also appears to have a long runway for inorganic growth that should bolster growth over the long-run. Since its 2018 spin, NVT has begun to establish a solid track record of acquisitions, with six (mostly tuck-in) transactions representing over $700mm in company sales today.
Some other details and nuances that attracted me to the company: geographically, nVent is focused on North America (~70% of sales) and EMEA (20%). Most NVT products are simple in nature (see examples below), which reduces supply chain complexity/risk. In its core Enclosures segment (half of sales), NVT holds ~80% market share and is considered the gold standard (“the Kleenex of electrical enclosures” as one former employee effectively put it). In the Electrical & Fastening segment (30% of sales), NVT maintains a leading market position in a highly fragmented market. The company recently completed a big step towards consolidating this market by acquiring ECM Industries. NVT’s largest acquisition to date, ECM generated over $400mm of LTM sales and $100mm of EBITDA…” (Click here to read the full text)
An electrical engineer inspecting a wiring accessories product.
NVent Electric plc (NYSE:NVT) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 48 hedge fund portfolios held NVent Electric plc (NYSE:NVT) at the end of third quarter which was 35 in the previous quarter.
We discussed NVent Electric plc (NYSE:NVT) in another article and shared the list of best European dividend stocks to buy. In addition, please check out our hedge fund investor letters Q4 2023 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
