First Eagle Investment Management, an investment management firm, published its second-quarter 2021 investor letter – a copy of which can be downloaded here. A net return of 4.73% was delivered by the fund for the first half of 2021. The Fund underperformed the MSCI World Index which returned 13.05% 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 First Eagle Investment Management, the fund mentioned Komatsu Ltd. (NYSE: KMTUY) and discussed its stance on the firm. Komatsu Ltd. is a Tokyo, Japan-based manufacturing company with a $24.8 billion market capitalization. KMTUY delivered a -4.84% return since the beginning of the year, while its 12-month returns are up by 13.54%. The stock closed at $25.97 per share on September 15, 2021.
Here is what First Eagle Investment Management has to say about Komatsu Ltd. in its Q2 2021 investor letter:
“The leading detractors in the quarter (includes) Komatsu Ltd. Komatsu has been among the machinery companies buffeted by news flow around infrastructure spending in the US. While a bipartisan Senate group, with the support of President Biden, reached an agreement on an eight-year, $1.2 trillion bill, its future is murky. The infrastructure bill appears to be linked to a broader economic agenda that likely will require a thorny budget reconciliation process in order to bypass a Republican filibuster and pass both chambers of Congress.”
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Based on our calculations, Komatsu Ltd. (NYSE: KMTUY) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. KMTUY was in 1 hedge fund portfolio at the end of the first half of 2021. Komatsu Ltd. (NYSE: KMTUY) delivered a -6.38% 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.
