Polen Capital, an investment management firm, published its “Polen U.S. SMID Company Growth Fund” second quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly gross return of 12.02% was delivered by the fund for the second quarter of 2021, outperforming its Russell 2500 Growth benchmark that delivered a 6.04% gain 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 Polen Capital, the fund mentioned Generac Holdings Inc. (NYSE: GNRC) and discussed its stance on the firm. Generac Holdings Inc. is a Wisconsin, United States-based engine equipment manufacturing company with a $27.9 billion market capitalization. GNRC delivered a 94.52% return since the beginning of the year, while its 12-month returns are up by 147.80%. The stock closed at $453.75 per share on September 3, 2021.
Here is what Polen Capital has to say about Generac Holdings Inc. in its Q2 2021 investor letter:
“On a securities level, our top contributors (includes) Generac. All these businesses performed well fundamentally. For Generac, the leading provider of residential standby generators, fundamentals remained strong, but there was little to highlight from the quarter.”
Based on our calculations, Generac Holdings Inc. (NYSE: GNRC) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. GNRC was in 38 hedge fund portfolios at the end of the first half of 2021, compared to 36 funds in the previous quarter. Generac Holdings Inc. (NYSE: GNRC) delivered a 33.93% 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.
