Madison Funds, an investment management firm, published its “Madison Investors Fund” third-quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly portfolio return of 0.07% was recorded by the fund’s Class Y shares for the third quarter of 2021, with an 11.86% gain on a year-to-date basis, compared to the S&P 500 Index’s gains of 0.58%, for the third quarter and 15.92% year-to-date (YTD). You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
Madison Funds, in its Q3 2021 investor letter, mentioned TE Connectivity Ltd. (NYSE: TEL) and discussed its stance on the firm. TE Connectivity Ltd. is a Schaffhausen, Switzerland-based consumer electronics company with a $48.2 billion market capitalization. TEL delivered a 21.58% return since the beginning of the year, while its 12-month returns are up by 39.00%. The stock closed at $147.01 per share on October 19, 2021.
Here is what Madison Funds has to say about TE Connectivity Ltd. in its Q3 2021 investor letter:
“TE Connectivity is the most exposed to global automotive trends of any company in the portfolio. Its highly engineered and customized electrical connectors generate an average of $65 in content sold for a high proportion of cars produced globally. For TE, the move to EVs equates to a step up to $120 in content per vehicle. In its most recent quarterly report, TE’s automotive revenue was 13% higher than the like 2019 quarter despite global auto production approximately 15% lower than in 2019. The difference can only be market share gains and mix gains via EV content. We are optimistic that TE Connectivity can grow this business nicely as global auto production recovers and EVs account for increasing proportions of the mix.”
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Based on our calculations, TE Connectivity Ltd. (NYSE: TEL) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. TEL was in 39 hedge fund portfolios at the end of the first half of 2021. TE Connectivity Ltd. (NYSE: TEL) delivered a 5.73% 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.
