Artisan Partners, a high value-added investment management firm, published its ‘Artisan Mid Cap Fund’ second quarter 2021 investor letter – a copy of which can be downloaded here. A return of 10.45% was recorded by its Investor Class: ARTMX, 10.46% by its Advisor Class: APDMX, and 10.52% by its Institutional Class: APHMX, in the second quarter of 2021, all below the Russell Midcap® Growth Index that delivered an 11.07% return, but outperforming the Russell Midcap® Index that was up by 7.50% for the same period. You can take a look at the fund’s top 5 holdings to have an idea about their top bets for 2021.
In the Q2 2021 investor letter of Artisan Partners, the fund mentioned Global Payments Inc. (NYSE: GPN) and discussed its stance on the firm. Global Payments Inc. is an Atlanta, Georgia-based financial technology services provider with a $46.8 billion market capitalization. GPN delivered a -26.11% return since the beginning of the year, while its 12-month returns are down by -10.19%. The stock closed at $162.51 per share on September 1, 2021.
Here is what Artisan Partners has to say about Global Payments Inc. in its Q2 2021 investor letter:
“Global Payments’ fundamentals are trending positively after being negatively impacted by the pandemic in 2020—YoY revenue growth not only returned to the black, but also accelerated through Q1, margins are strong and the balance sheet is healthy. Strategically, the company has made progress as well, inking partnerships with Amazon Web Services and Google, and returning to the M&A market with the acquisition of Zego, a residential property management software provider with a strong payment processing component. Unfortunately, shares have not been rewarded as investors question the long-term competitive position of incumbent payment processing companies amid the rise in innovation and disruption in payments technology in recent years. We believe Global Payments has been positioning itself to thrive in a more dynamic competitive environment for years—investing heavily in software businesses and omnichannel payments capabilities—though continued execution and patience may be required to quell disruption fears. We view the long-term risk-reward as attractive, and we have maintained our position.”
Photo by Viacheslav Bublyk on Unsplash
Based on our calculations, Global Payments Inc. (NYSE: GPN) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. GPN was in 66 hedge fund portfolios at the end of the first half of 2021, compared to 62 funds in the previous quarter. Global Payments Inc. (NYSE: GPN) delivered a -17.59% return in the past 3 months.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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Disclosure: None. This article is originally published at Insider Monkey.
