Greenhaven Road Capital, an investment management firm, published its second quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly return of approximately 6% net of fees was recorded by the fund for the second quarter of 2021, bringing YTD returns to approximately 21%. You can view the fund’s top 5 holdings to have an idea about their top bets for 2021.
In the Q2 2021 investor letter of Greenhaven Road Capital, the fund mentioned Roku, Inc. (NASDAQ: ROKU), and discussed its stance on the firm. Roku, Inc. is a Los Gatos, California-based video streaming company, that currently has a $57.6 billion market capitalization. ROKU delivered a 30.96% return since the beginning of the year, extending its 12-month returns to 180.72%. The stock closed at $449.60 per share on July 29, 2021.
Here is what Greenhaven Road Capital has to say about Roku, Inc. in its Q2 2021 investor letter:
“ROKU (ROKU) – We don’t own Roku for the hardware, we own it for the streaming platform, which has favorable economics on both the Roku channel and other streaming service apps it hosts. In Q1, over 18 billion hours of content were streamed via Roku, including a more than doubling of hours streamed on the Roku channel itself, which reached over 70 million people. Given that Roku is a small player that controls very little content in the media landscape, my biggest concern has been that large players would stop or choose not to participate on their platform, reducing the customer value proposition. When the Peacock streaming service launched, they were not on Roku because they did not want to share revenue. When HBO’s streaming service launched, they were not on Roku either because they did not want to share revenue. Eventually, both concluded that the distribution and ease of use provided by Roku made it such that a partnership ultimately made sense. It was recently announced that Apple would begin paying for an Apple TV button on the Roku remote… another indication of the powerful place Roku occupies in the streaming ecosystem.”
Copyright: antonioguillem / 123RF Stock Photo
Based on our calculations, Roku, Inc. (NASDAQ: ROKU) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. ROKU was in 63 hedge fund portfolios at the end of the first quarter of 2021, compared to 60 funds in the fourth quarter of 2020. Roku, Inc. (NASDAQ: ROKU) delivered a 27.00% 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.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage.
Disclosure: None. This article is originally published at Insider Monkey.
