Bireme Capital, an investment management firm, published its third-quarter 2021 investor letter – a copy of which can be seen here. A portfolio net return of 9.1% was delivered by the fund for the third quarter of 2021, handily eclipsing the S&P 500’s return of 0.6%. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
Bireme Capital, in its Q3 2021 investor letter, mentioned fuboTV Inc. (NYSE: FUBO) and discussed its stance on the firm. fuboTV Inc. is a New York, New York-based streaming company with a $4.7 billion market capitalization. FUBO delivered a 20.57% return since the beginning of the year, while its 12-month returns are up by 126.12%. The stock closed at $33.06 per share on November 1, 2021
Here is what Bireme Capital has to say about fuboTV Inc. in its Q3 2021 investor letter:
“FuboTV, an over-the-top TV company, also saw its price collapse from a February peak, in this case from $50 down to about $26 today. We remain convinced that this business is the classic case of selling a dollar for 90c. The company did not even make a gross profit in 2020, with subscriber expenses and broadcasting costs totalling $234m against just $218m of revenue. And since content costs for vMVPDs tend to increase nearly linearly with subscribers, we expect the company to continue to lose money.
Yet the market cap for FuboTV remains at nearly $4b, as investors pray that a future sportsbook slapped onto their TV business will somehow stem the tide of red ink. To get there the company may need to raise significant capital given that the firm had a $149m operating cash outflow in 2020. We remain short FUBO.”
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Based on our calculations, fuboTV Inc. (NYSE: FUBO) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. FUBO was in 18 hedge fund portfolios at the end of the first half of 2021. fuboTV Inc. (NYSE: FUBO) delivered a 29.90% 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.
