Janitorial services continue to be in demand and ABM Industries (ABM) appears to be benefiting
Vulcan Value Partners, a proprietary investment vehicle for all public equity investments, has released its Q3 2020 Investor Letter “Small Cap Composite” – a copy of which can be downloaded here. A gross return of 0.1% was recorded by the fund for the third quarter of 2020, below its benchmark Russel 2000 Value Index which returned 2.6% and the Russel 2000 Index which returned 4 .9%. You can check out the fund’s top 10 holdings to get an overview of their best bets for 2021.
Vulcan Value Partners, in its third quarter 2020 letter to investors, said the need for janitorial services has increased during the pandemic and continues to be in demand to date. They acquired a new position in ABM Industries Incorporated (NYSE: ABM), America’s largest provider of janitorial services which currently has a market capitalization of $2.75 billion. Over the past 3 months, ABM Industries Incorporated has returned 21.58% to $41.19 per share at the January 15 close.
Here is what Vulcan Value Partners has to say about ABM Industries Incorporated in its letter to investors:
“ABM Industries Inc. is the largest provider of janitorial services in the United States. Its market segments also include facility management services, parking services and maintenance services. Its technical solutions business modernizes systems electrical, HVAC, lighting and water to reduce customer spending on utilities ABM Industries’ asset light business model, high level of recurring revenue and strong cash flow generation free software make it an attractive company to provide solutions for businesses with multiple locations. It has made significant investments in technology to effectively manage its workforce and create flexibility in tough economic times. New service offerings , including Enhanced Clean, add value and increase customer loyalty The trend towards outsourcing janitorial services is accelerating celerates during COVID-19 and market share is shifting to large many vendors, like ABM Industries, who can adapt to customer needs without disrupting their business models.”
Last December 2020, we published an article that ABM Industries Incorporated (NYSE:ABM) was in the portfolio of 18 hedge funds, nearly hitting its all-time high of 21. ABM has returned 8.85% since the beginning of the year.
As of September 2020, Vulcan Value Partners held an 844,000 share position in ABM which amounted to $30 million. However, our calculations showed that ABM Industries Incorporated (NYSE:ABM) is not among the 30 most popular stocks among hedge funds.
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