Horizon Kinetics, an investment management company, released its second-quarter 2022 investor letter. You can download it here. The letter discussed how inflation affects valuations and investors’ returns. The fund’s portfolios are concentrated and focused on the businesses that can benefit from the inflationary environment. You can check the fund’s top 5 holdings to know more about its best picks in 2022.
In the letter, Horizon Kinetics discussed its specifications for portfolio selection. The fund holds companies like CME Group Inc. (NASDAQ:CME), which operates worldwide and has a market capitalization of $71.712 billion. CME Group Inc. (NASDAQ:CME) engages in the trading of futures and options and is headquartered in Chicago, Illinois. The stock of CME Group Inc. (NASDAQ:CME) closed at $199.52 per share on July 28, 2022. On a monthly time frame, CME Group Inc. (NASDAQ:CME) was down 2.33%, whereas its 12-month return dropped to -5.94%.
Here is what Horizon Kinetics specifically said about CME Group Inc. (NASDAQ:CME) in its Q2 2022 investor letter:
“As a stock, CME Group (NASDAQ:CME) is more or less unchanged. As a business, though, it is thriving. Its trading volumes across these various sectors and assets are generally up in the 20% to 50% range, including its overseas derivatives operations.
That’s because derivatives exchanges, are where the world goes to lay off or hedge financial risk. Exchanges are the croupiers of the financial system: with a relatively modest investment, they set up a venue to facilitate transactions, but beyond that invest little and collect spreads and fees. Their operating costs vary relatively little with volume changes. In the March quarter, for instance, revenues rose about 7%, and operating income about 18%.
And exchanges constantly test new types of contracts. They don’t all find traction, but some do. In June, CME announced the first 30-Year Uniform Mortgage-Backed Securities futures contracts. These could provide greater liquidity and hedging ability for holders of securitized residential mortgages, like mortgage lenders. If they become accepted, the market for them is very large. Using the U.S. Aggregate Bond Index as a proxy for market size, mortgage-backed securities, at 27%, are the second largest allocation, behind Treasuries.”
Although Horizon Kinetics invested in CME Group Inc. (NASDAQ:CME), the stock isn’t on our list of 30 Most Popular Stocks Among Hedge Funds. At the end of the first quarter, CME Group Inc. (NASDAQ:CME) was in 58 hedge fund portfolios as per our database, which was up from 55 in the previous quarter. CME Group Inc. (NASDAQ:CME) shares lost 6.52% of their value over the last 52 weeks.
In May, we published an article on CME Group Inc. (NASDAQ:CME) and shared Baron Funds’ thoughts about the company. If you want to read more investor letters from hedge funds and other leading investors, check out our hedge fund investor letters Q2 2022 page.
Disclosure: None. This article is originally published at Insider Monkey.
