Major Funds Increase Stakes in HVAC Distributor Ahead of Earnings

Institutional investors are building significant positions in Watsco, a leading distributor of heating, ventilation, and air conditioning (HVAC) products, just before its upcoming quarterly report. Recent regulatory filings reveal substantial purchases by major asset managers, signaling confidence in the company's long-term prospects during a period of relative share price weakness.

• FMR LLC (Fidelity) has reported a 5.6% ownership stake.
• Giverny Capital has established a new core position of 3.5%.
• The firm's quarterly results are scheduled for release on February 17.
• The stock currently offers a dividend yield of approximately 2.9%.

Documents filed with U.S. regulators show that Fidelity has crossed the mandatory reporting threshold of 5% ownership. The fund giant now holds 1,966,899 shares, positioning it among Watsco's largest institutional shareholders. This accumulation comes as the stock trades around 24% below its 52-week high, having closed at $405.94.

In a separate move, Giverny Capital Asset Management has initiated a new position, adding the stock to its portfolio. An investor letter released earlier this week disclosed that Watsco represents a 3.5% weighting and is now considered a core holding. Market observers view this activity as a pivot toward value-oriented investments away from the currently dominant technology sector.

Should investors sell immediately? Or is it worth buying Watsco?

Investment Thesis Centers on Market Dominance and Dividends

Giverny's rationale for the investment centers on Watsco's commanding position within the fragmented North American HVAC distribution market. The investor highlighted the company's established distribution network and consistent track record of capital generation as key competitive advantages.

For income-focused shareholders, the company's dividend history remains a compelling feature. Watsco has increased its dividend for 52 consecutive years. The most recent quarterly payout of $3.00 per share was distributed on January 30, equating to an annualized dividend of $12.00.

The stock has been consolidating in recent trading sessions. All eyes are now on the February 17 earnings report, which will cover the fourth quarter and full year 2025. Investors will scrutinize whether growth from the company's digital platforms and operational efficiency managed to offset cooling conditions in the real estate market. The upcoming figures will also test whether the fundamental performance justifies the recent accumulation of shares by these major funds.