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Was The Smart Money Right About Vulcan Materials Company (VMC)?

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A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31st, so let’s proceed with the discussion of the hedge fund sentiment on Vulcan Materials Company (NYSE:VMC).

Is Vulcan Materials Company (NYSE:VMC) a healthy stock for your portfolio? Investors who are in the know were turning bullish. The number of bullish hedge fund positions increased by 2 lately. Vulcan Materials Company (NYSE:VMC) was in 44 hedge funds' portfolios at the end of December. The all time high for this statistic is 57. Our calculations also showed that VMC isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 42 hedge funds in our database with VMC holdings at the end of September.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

John Armitage Egerton Capital
John Armitage Egerton Capital

John Armitage of Egerton Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we're going to take a look at the fresh hedge fund action surrounding Vulcan Materials Company (NYSE:VMC).

Do Hedge Funds Think VMC Is A Good Stock To Buy Now?

At the end of December, a total of 44 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from the third quarter of 2020. On the other hand, there were a total of 52 hedge funds with a bullish position in VMC a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

Is VMC A Good Stock To Buy?
Is VMC A Good Stock To Buy?

More specifically, Egerton Capital Limited was the largest shareholder of Vulcan Materials Company (NYSE:VMC), with a stake worth $250.1 million reported as of the end of December. Trailing Egerton Capital Limited was Stockbridge Partners, which amassed a stake valued at $137.1 million. Alkeon Capital Management, Citadel Investment Group, and D E Shaw 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 Mountaineer Partners Management allocated the biggest weight to Vulcan Materials Company (NYSE:VMC), around 5.53% of its 13F portfolio. Park Presidio Capital is also relatively very bullish on the stock, setting aside 5.43 percent of its 13F equity portfolio to VMC.

As aggregate interest increased, key money managers were leading the bulls' herd. Junto Capital Management, managed by James Parsons, initiated the largest position in Vulcan Materials Company (NYSE:VMC). Junto Capital Management had $53.6 million invested in the company at the end of the quarter. Clint Carlson's Carlson Capital also initiated a $41.4 million position during the quarter. The other funds with brand new VMC positions are Phill Gross and Robert Atchinson's Adage Capital Management, Andrew Sandler's Sandler Capital Management, and Paul Marshall and Ian Wace's Marshall Wace LLP.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Vulcan Materials Company (NYSE:VMC) but similarly valued. These stocks are Fifth Third Bancorp (NASDAQ:FITB), BioNTech SE (NASDAQ:BNTX), International Paper Company (NYSE:IP), Northern Trust Corporation (NASDAQ:NTRS), Warner Music Group Corp. (NASDAQ:WMG), Ameren Corporation (NYSE:AEE), and Rollins, Inc. (NYSE:ROL). This group of stocks' market caps resemble VMC's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FITB,43,506319,13 BNTX,17,170450,0 IP,31,167610,-1 NTRS,31,388257,3 WMG,29,1021052,9 AEE,19,313397,-1 ROL,28,644651,-1 Average,28.3,458819,3.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.3 hedge funds with bullish positions and the average amount invested in these stocks was $459 million. That figure was $1338 million in VMC's case. Fifth Third Bancorp (NASDAQ:FITB) is the most popular stock in this table. On the other hand BioNTech SE (NASDAQ:BNTX) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Vulcan Materials Company (NYSE:VMC) is more popular among hedge funds. Our overall hedge fund sentiment score for VMC is 80.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks returned 13.6% in 2021 through April 30th but still managed to beat the market by 1.6 percentage points. Hedge funds were also right about betting on VMC as the stock returned 20.4% since the end of December (through 4/30) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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

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