Bernzott Capital Advisors, an investment management firm, published its “US Small Cap Value Fund” third quarter 2021 investor letter – a copy of which can be downloaded here. The portfolio fell -3.0% (gross) and -3.1% (net) during 3Q, in line with the Russell 2000 Value’s decline of -3.0%, and somewhat more than the Russell 2500 Value’s drop of -2.1%. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
Bernzott Capital Advisors, in its Q3 2021 investor letter, mentioned Callaway Golf Company (NYSE: ELY) and discussed its stance on the firm. Callaway Golf Company is a Carlsbad, California-based sports equipment company with a $5.4 billion market capitalization. ELY delivered a 21.66% return since the beginning of the year, while its 12-month returns are up by 74.39%. The stock closed at $29.21 per share on November 12, 2010.
Here is what Bernzott Capital Advisors has to say about Callaway Golf Company in its Q3 2021 investor letter:
“Callaway Golf (ELY): The stock succumbed to profit taking despite a strong earnings report as some perceived pandemic beneficiaries such as Callaway sold off as investors questioned sustainability. In our view, Callaway’s future looks bright, especially as it captures growth opportunities from its acquisition of Topgolf. Despite this quarter’s weakness, the stock remains up +15% for the year.”
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Based on our calculations, Callaway Golf Company (NYSE: ELY) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. ELY was in 39 hedge fund portfolios at the end of the first half of 2021, compared to 40 funds in the previous quarter. Callaway Golf Company (NYSE: ELY) delivered a -0.38% 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.
