Here’s Why Wayfair (W) Became One of Vulcan Value’s Top Detractor

Vulcan Value Partners, an investment management firm, published its first-quarter 2022 investor letter – a copy of which can be downloaded here. All five of the fund’s strategies trailed their respective benchmarks during the quarter. According to the fund, they ‘place no weight on short-term results, good or bad, and neither should you’. Vulcan Value Partners have made and will continue to make decisions that negatively impact short-term performance when it thinks it can improve its long-term returns and lower risk. Try to spend some time looking at the fund’s top 5 holdings to be informed about their best picks for 2022.

In its Q1 2022 investor letter, Vulcan Value Partners mentioned Wayfair Inc. (NYSE:W) and explained its insights for the company. Founded in 2002, Wayfair Inc. (NYSE:W) is a Boston, Massachusetts-based e-commerce company with a $5.0 billion market capitalization. Wayfair Inc. (NYSE:W)  delivered a -74.94% return since the beginning of the year, while its 12-month returns are down by -84.26%. The stock closed at $47.60 per share on May 18, 2022.

Here is what Vulcan Value Partners has to say about Wayfair Inc. (NYSE:W) in its Q1 2022 investor letter:

“Wayfair Inc. is a leading ecommerce retailer for home goods and furnishings. Wayfair is facing tough comparables as the economy emerges from the pandemic lockdowns. We expected this to be the case. Inflation is much higher than the market expected and the Fed’s response to that inflation has increased the risk of a recession in the near to medium term. With a potential recession on the horizon, our expectations of a multi-year expansion for Wayfair post-pandemic have been pushed out but not diminished. We believe the delay is temporary and we are pleased to see that Wayfair is taking steps to continue to deepen and widen its competitive moat, especially in its logistics capabilities. Long term, we are confident that ecommerce will continue to grow as a share of furniture retail sales. We believe that Wayfair’s continued investments in its infrastructure and supply chain will allow the company to remain the clear leader in this space.”

Our calculations show that Wayfair Inc. (NYSE:W) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Wayfair Inc. (NYSE:W) was in 28 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 31 funds in the previous quarter. Wayfair Inc. (NYSE:W) delivered a -65.14% return in the past 3 months.

In May 2022, we also shared another hedge fund’s views on Wayfair Inc. (NYSE:W) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.

Disclosure: None. This article is originally published at Insider Monkey.