Tao Value, an investment management firm, published its third-quarter 2021 investor letter – a copy of which can be downloaded here. A return of -7.53% was delivered by the fund for the Q3 of 2021, compared to its benchmark, the MSCI All Country World Index that delivered a -1.26% return for the same period. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
Tao Value, in its Q3 2021 investor letter, mentioned Atlassian Corporation Plc (NASDAQ: TEAM) and discussed its stance on the firm. Atlassian Corporation Plc is a Sydney, Australia-based software company with a $114.5 billion market capitalization. TEAM delivered a 94.22% return since the beginning of the year, while its 12-month returns are up by 146.47%. The stock closed at $458.13 per share on October 29, 2021.
Here is what Tao Value has to say about Atlassian Corporation Plc in its Q3 2021 investor letter:
“Atlassian (TEAM) delivered a “ripper”(quoting management from earnings call) quarter, adding a record 23K new customers last quarter, which is more than the total new customers of full year 2020. The cloud revenue also shows growth acceleration. This is surprisingly impressive, give that TEAM is believed to pull future demand forward to last quarter (i.e. the market expects de-acceleration after such effect) by ending their on-premise offerings in February 2021. As a result, the stock price jumped up 20+% on the earnings day. TEAM has increased 20-fold from our initial purchase and is now growing into our 3rd largest position.”
Photo by Danial Igdery on Unsplash
Based on our calculations, Atlassian Corporation Plc (NASDAQ: TEAM) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. TEAM was in 64 hedge fund portfolios at the end of the first half of 2021, compared to 67 funds in the previous quarter. Atlassian Corporation Plc (NASDAQ: TEAM) delivered a 39.36% 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, the demand for helium is soaring and there is a helium supply shortage, so we are checking out stock pitches like this emerging helium stock. 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.
