Cooper Investors, an investment management firm, published its “Cooper Investors Global Equities Fund (Hedged)” second quarter 2021 investor letter – a copy of which can be downloaded here. For the 3 months and 12 months to June 30th, the Fund returned 7.97% and 32.87% respectively, while its benchmark, by comparison returned 7.05% and 35.32% over 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 Cooper Investors, the fund mentioned Envista Holdings Corporation (NYSE: NVST), and discussed its stance on the firm. Envista Holdings Corporation is a Brea, California-based dental equipment and supplies manufacturing company, that currently has a $6.6 billion market capitalization. NVST delivered a 22.06% return since the beginning of the year, extending its 12-month returns to 76.17%. The stock closed at $41.17 per share on August 06, 2021.
Here is what Cooper Investors has to say about Envista Holdings Corporation in its Q2 2021 investor letter:
“As noted in our previous update stock numbers in the Fund had become temporarily elevated due to participation in a number of spin-off and IPO opportunities. This has reduced back to 42 positions after three stocks were sold during the quarter with proceeds used to upsize recent investments, these sells (includes) Envista.
Envista, one of the world’s leading dental product companies, was spun out of portfolio holding Danaher in September ‘19. The Fund participated in the IPO at $20 and subsequently built up a position. Envista had been an underperforming asset inside Danaher with minimal growth and low teens EBIT margins but with the ‘focus dividend’ of being independent Envista had an opportunity to improve its growth rate and margins towards peer levels. Management have made great strides with growth turning positive and margins expanding to the high teens. In our view management have now executed on the low hanging fruit opportunities and with shares having responded positively we subsequently sold the position.”
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Based on our calculations, Envista Holdings Corporation (NYSE: NVST) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. NVST was in 34 hedge fund portfolios at the end of the first quarter of 2021, compared to 33 funds in the fourth quarter of 2020. Envista Holdings Corporation (NYSE: NVST) delivered a -9.48% 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.
