VGI Partners Global Investments Limited, an investment management company, released its 2022 annual investor letter. A copy of the same can be downloaded here. The firm returned -22.3% (net) for the year ended 31st December 2022. 2022 was a challenging year for the global equity market, the S&P 500 declined -19% during the period, the NASDAQ Composite retreated -33%, and the MSCI World Index fell -19% in the same period. In addition, please check the fund’s top five holdings to know its best picks in 2022.
VGI Partners highlighted stocks like Qualtrics International Inc. (NASDAQ:XM) in the 2022 annual investor letter. Headquartered in Provo, Utah, Qualtrics International Inc. (NASDAQ:XM) provides an experience management platform. On March 31, 2023, Qualtrics International Inc. (NASDAQ:XM) stock closed at $17.830 per share. One-month return of Qualtrics International Inc. (NASDAQ:XM) was 3.30%, and its shares lost 38.56% of their value over the last 52 weeks. Qualtrics International Inc. (NASDAQ:XM) has a market capitalization of $10.801 billion.
VGI Partners made the following comment about Qualtrics International Inc. (NASDAQ:XM) in its 2022 annual investor letter:
“As previously highlighted, our high exposure to technology, high-growth oriented businesses drove the bulk of our underperformance in CY22. One key mistake we made was with Qualtrics International Inc. (NASDAQ:XM), which was the second largest detractor in the year. With the benefit of hindsight, we over-estimated the company’s growth profile and overpaid for the business. We assumed the category would be more resilient even in an environment where customers are scrutinising IT budgets and we failed to change our mind when growth began to disappoint. Our valuation approach was also overly reliant on long-term free cashflows – because we like to think about businesses with a long-term mindset – but we did not pay enough attention to near-term valuations and expectations. Lastly, we were insufficiently critical when XM announced a large acquisition at the peak of the software bubble in mid-2021, as this was a potential sign that the outlook for XM’s core business had deteriorated.
The big lesson that we draw from our XM investment is one of sizing – given the wide range of outcomes, this should have been reflected through a smaller-sized investment. We continue to own XM today as the valuation and expectations have been reset, and XM remains the undisputed leader in an emerging, mission-critical software category with a long growth runway. This view has been substantiated by our conversations with customers at the XM Innovation Sydney event in November 2022 and recent CIO surveys affirming XM’s pole position amongst emerging software vendors. In recent days, SAP have announced a strategic review of its XM stake, removing a key overhang for the stock and increasing the probability that XM will trade more in line with peers or be acquired.”
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Qualtrics International Inc. (NASDAQ:XM) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 30 hedge fund portfolios held Qualtrics International Inc. (NASDAQ:XM) at the end of the fourth quarter which was 27 in the previous quarter.
We discussed Qualtrics International Inc. (NASDAQ:XM) in another article and shared the list of most promising mid-cap stocks according to analysts. In addition, please check out our hedge fund investor letters Q4 2022 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
