ClearBridge Investments, an investment management firm, published its “Select Strategy” second quarter 2021 investor letter – a copy of which can be downloaded here. The Strategy outperformed in a second-quarter rotation into growth stocks, fueled by a comeback in the higher growth disruptors we have owned for a number of years. 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 ClearBridge Investments, the fund mentioned Endeavor Group Holdings, Inc. (NYSE: EDR) and discussed its stance on the firm. Endeavor Group Holdings, Inc. is a Beverly Hills, California-based holding company with a $7.4 billion market capitalization. EDR delivered a 5.81% return for the past month, and it closed at $28.98 per share on September 29, 2021.
Here is what ClearBridge Investments has to say about Endeavor Group Holdings, Inc. in its Q2 2021 investor letter:
“In addition to these disruptors, we added exposure in evolving opportunities through the IPO of Endeavor Group. Endeavor owns sports leagues like UFC and Pro Bull Riders which should benefit from the return of live events as well as leading sports agency IMG and its IMG Academy training franchise. Streaming companies are hungry for content and rights prices for programming owned by Endeavor are rising. Endeavor, as a representative to many of the world’s most well-known athletes, should also benefit from soaring sports salaries.”
Photo by dylan nolte on Unsplash
Based on our calculations, Endeavor Group Holdings, Inc. (NYSE: EDR) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. EDR was in 24 hedge fund portfolios at the end of the first half of 2021. Endeavor Group Holdings, Inc. (NYSE: EDR) delivered a 5.51% 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.