ClearBridge Investments, an investment management firm, published its “Mid Cap Growth Strategy” second quarter 2021 investor letter – a copy of which can be downloaded here. While the ClearBridge Mid Cap Growth Strategy trailed the benchmark in the second quarter, it had an absolute performance (+14.9%) and relative success (+445 bps over benchmark) year-to-date. 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 Coupa Software Incorporated (NASDAQ: COUP) and discussed its stance on the firm. Coupa Software Incorporated is a San Mateo, California-based global technology platform with a $16.2 billion market capitalization. COUP delivered a -35.25% return for the past month and it closed at $216.55 per share on September 29, 2021.
Here is what ClearBridge Investments has to say about Coupa Software Incorporated in its Q2 2021 investor letter:
“Within IT, we added positions in Coupa Software, a leader in the fast growing Business Spend Management market with opportunity to double its total addressable market by harnessing B2B payments with its Coupa Pay product; and AppLovin, a leading mobile gaming advertising network in a unique position to utilize its ad expertise to grow its own mobile game business at low user acquisition costs.”
Based on our calculations, Coupa Software Incorporated (NASDAQ: COUP) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. COUP was in 54 hedge fund portfolios at the end of the first half of 2021, compared to 50 funds in the previous quarter. Coupa Software Incorporated (NASDAQ: COUP) delivered a -16.32% 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, lithium mining is one of the fastest-growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV 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.
