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 iRhythm Technologies, Inc. (NASDAQ: IRTC) and discussed its stance on the firm. iRhythm Technologies, Inc. is a San Francisco, California-based healthcare company with a $1.3 billion market capitalization. IRTC delivered a -80.08% return since the beginning of the year, while its 12-month returns are down by -77.76%. The stock closed at $48.00 per share on September 2, 2021.
Here is what Artisan Partners has to say about iRhythm Technologies, Inc. in its Q2 2021 investor letter:
“Last quarter, we discussed our decision to meaningfully reduce our position size in iRhythm Technologies after Medicare Administrative Contractor (MAC) Novitas announced a dramatic reimbursement cut for the company’s Zio cardiac monitor. In early April, Novitas revisited its decision and announced it was increasing the reimbursement rate. Unfortunately, the new price still falls significantly below our expectations, and iRhythm also announced it would no longer provide Zio services to Medicare fee-for-service patients (25% of revenue). While we believe the Zio is a substantial upgrade from the Holter monitor given its smaller size and algorithm-based analytics, we decided to end our investment campaign shortly after the announcement in April given our lack of visibility into the profit cycle.”
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Based on our calculations, iRhythm Technologies, Inc. (NASDAQ: IRTC) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. IRTC was in 22 hedge fund portfolios at the end of the first half of 2021, compared to 19 funds in the previous quarter. iRhythm Technologies, Inc. (NASDAQ: IRTC) delivered a -23.85% 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.
