While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Vulcan Materials Company (NYSE:VMC).
Is VMC stock a buy or sell? Hedge funds were in a bullish mood. The number of bullish hedge fund bets moved up 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).
Andrew Sandler of Sandler Capital Management
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Do Hedge Funds Think VMC Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 44 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards VMC over the last 22 quarters. With hedge funds' sentiment swirling, there exists a few noteworthy hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
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 one would reasonably expect, some big names were breaking ground themselves. Junto Capital Management, managed by James Parsons, assembled the most outsized 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 following funds were also among the new VMC investors: 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 now review hedge fund activity in other stocks similar to Vulcan Materials Company (NYSE:VMC). We will take a look at 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 valuations match VMC's market valuation.
[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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks returned 5.3% in 2021 through March 19th but still managed to beat the market by 0.8 percentage points. Hedge funds were also right about betting on VMC as the stock returned 11.7% since the end of December (through 3/19) 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.