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 Envestnet, Inc. (NYSE: ENV) and discussed its stance on the firm. Envestnet, Inc. is a Chicago, Illinois-based financial services company with a $4.2 billion market capitalization. ENV delivered a -6.00% return since the beginning of the year, while its 12-month returns are down by -1.70%. The stock closed at $77.59 per share on September 7, 2021.
Here is what Polen Capital has to say about Envestnet, Inc. in its Q2 2021 investor letter:
“To fund the new positions, we sold Envestnet. The company was subscale positions in the Portfolio that we do not believe were as compelling as Trupanion and Farfetch. Additionally, by selling the company, classified in the information technology sector, we reduced our sector weighting, which was approaching our 50% limit. We felt this was an attractive opportunity to upgrade the Portfolio to higher conviction secular growth holdings while also addressing a portfolio construction requirement.”
Photo by Scott Graham on Unsplash
Based on our calculations, Envestnet, Inc. (NYSE: ENV) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. ENV was in 17 hedge fund portfolios at the end of the first half of 2021, compared to 18 funds in the previous quarter. Envestnet, Inc. (NYSE: ENV) delivered a -1.09% 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, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. 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.
