Waste Management Inc

Waste Management (WM) collects, transports, recycles, and disposes of residential, commercial, industrial, and municipal waste. We believe the company’s durable competitive advantage rests on its scale, route density, and strategic landfill and recycling facilities. This positions Waste Management favorably as a beneficiary of ongoing trends in waste management and recycling, particularly as environmental concerns continue to grow.

Waste Management (WM) was a top contributor to returns during the quarter after reporting solid quarterly results. Revenue was slightly below expectations largely due to challenges within WM Healthcare Solutions and depressed recycling commodity prices, while adjusted EBITDA and FCF were ahead of expectations, underscoring the strength of WM’s core business. The company’s vertically integrated asset base, particularly its ownership of scarce landfill and transfer station infrastructure, continued to support pricing growth above cost inflation, driving margin-accretive growth in a mixed macro environment. We continue to view WM as well-positioned to deliver double-digit earnings growth over the next three years.

Waste Management collects, transports, recycles, and disposes residential, commercial, industrial, and municipal waste. The company sets itself apart thanks to its scale, route density, and landfill/recycling facilities. During the quarter, the Fund added new positions in Waste Management while eliminating its position in Salesforce. This addition reflects our belief in Waste Management's durable competitive advantage and its ability to sustain its market position.

Waste Management has demonstrated resilience amid economic uncertainty, making it a defensive investment. The company's core business remains relatively unaffected by economic fluctuations, which positions it favorably in the current market environment. This stability has attracted investors seeking safety, contributing positively to the fund's performance. The stock's defensive nature is underscored by its ability to maintain operations and profitability even during downturns, reinforcing its status as a reliable holding in the portfolio.

Waste Management advanced higher during the period, driven by strong operational results which included record margins from its core collection and disposal business. The company remains well positioned to benefit from further pricing gains, contributions from sustainability investments, and synergies from the 2024 Stericycle acquisition. These factors contribute to its strong market share and pricing power, reinforcing its status as a high-quality, operationally defensive business.