Hedge Funds Poured $86 Billion Into Stocks — Should You Follow the Smart Money?

**SPEAKER_1** (0:03)
On radio, on YouTube, streaming live on investalk.com, and for our podcast subscribers, this is Invest Talk. Independent thinking, shared success.
Invest Talk is made possible by KPP Financial, a registered investment advisor firm serving clients throughout the United States. Here is KPP Financial Portfolio Manager, Luke Guerrero.

**Luke Guerrero** (0:33)
Good afternoon, fellow investors, and welcome to the Thursday, April 23rd, 2026 edition of Invest Talk. Before we get started, I want to point out that it is time again for one of our most popular events, a new Invest Talk Wealth webinar. As always, it's happening online. This iteration will be Wednesday, March 6th at 1 p.m. Pacific, just a little bit over two weeks away. This free webinar will focus on a topic that I think a lot of people are dealing with right now, and that topic is inflation.
The new Wealth webinar is titled How to Protect Your Portfolio from Inflation, Where to Allocate, What to Overweight, and How to Find Value. So mark your calendar for Wednesday, May 6th at 1 p.m. Pacific, and don't forget, you need to register. So head over to investtalk.com to register now.
All right, in just a bit, we'll talk about today's market performance and run down our show topics. But let's dive right in to our first caller question.

**SPEAKER_3** (1:32)
Justin, Luke, calling in regards to Core & Main, ticker symbol, BNM, been in a modest downtrend the last two years. Seems like it could be picking up a good entry point to my portfolio, like the name, like the sector. What do you think about starting position in this industrial pipeline company? Thank you.

**Luke Guerrero** (2:03)
Now, I remember Core & Main, which is the St. Louis-based specialty distributor of water, wastewater and storm drainage as one of the powerhouse names. I believe in our first Invest Talk market madness. It was the dark horse. It went further. It was a Cinderella story. And now, the company is about $9.5 billion, trading about $48 per share.
It had a remarkable 2023 and a pretty decent first half of 2024 But for the past year or so, it has been, I would say, ranging.
They recently reported on March 24th, Q4 net sales down 6.9% year over year. Earnings per share was $0.52 versus $0.33, which was the estimates. That's a 58% beat. Gross margins expanded 50 basis points to 27.1% in Q4. Full year gross margins up 30 basis points year over year. So you saw margin progress overall intact, despite a lot of softness, softness that is, in revenue volume. For fiscal year 26, they guided to about $7.8 billion in revenue. That's only 2% to 3% growth. And a bit below the consensus of nearly $8 billion in revenue, EBITDA guided to about $965 below the $987 consensus. Now over the past six months, they have been trading near the bottom of their 52 week range and below their 200 day moving average. They got up 6% on their most recent earnings day after that guidance came underneath consensus. But the three year total return for shareholders remains pretty strong at 125%. The long term story in a lot of ways is still intact, but near term momentum has stalled.
So what's really the driver here? Well, essential water infrastructure distributor is who they are. They have 16 consecutive years of sales growth. They have, in spite of volume issues, expanding gross margins. They have strong free cash flow. They have still a half a billion dollar share repurchase authorization. In a way, it is a toll road on America's aging water pipe replacement cycle. But daily average sales growth is down.
There is a clear demand cooling trend.
Private construction is soft. Tariff driven input costs, uncertainty, another overhang here. It is, in many ways, a high quality infrastructure distributor at a multi-year low valuation. There is no distributing that. The cautious 2-3% guidance is, in a lot of ways, a near term anchor because that sets an expectation that really isn't all that great. But what you are betting here on is the long cycle waters or infrastructure replacement wave. And the question is, is now a good time to enter or is it likely to continue ranging? I'm not seeing a lot of positive momentum. I do like this name. I think it's a strong name. I think it has secular growth drivers here. But probably for the next six months to a year, unlikely to be a lot of near term earnings and flexions. That is Core & Main, Tigger CNM, thanks for the call. We got a lot to talk about today, including my main focus point about hedge funds who have poured $86 billion into stocks. So should you follow the smart money? Goldman Sachs data shows hedge funds poured $86 billion into stocks as the Iran peace hopes grew, representing one of the largest buying surges in recent memory. We'll talk a little bit about why this massive institutional move might tell us something about market sentiment and whether we as retail investors should follow or be cautious when smart money rushes in. Also, I have plenty of other stories to talk about including how now that we are one year after this immigration crackdown, how did everyone's takes on what would happen to the labor market, what would happen to jobs, with input costs, how did those pan out? Also, touched on the dollar giving back a lot of their gains as traders started to abandon the green back. And should we have time at the end of the show, we'll touch on how industry regulators are starting to warn about exposure to hard to sell investments in the private markets.