Madison Funds, an investment management firm, published its “Madison Dividend Income Fund” third-quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly portfolio return of +11.9% was recorded by the fund’s Class Y shares for the third quarter of 2021, compared to the S&P 500, Russell 1000 Value, and Lipper Equity Income Index gains of +15.9%, +16.1%, and +14.0% respectively 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.
Madison Funds, in its Q3 2021 investor letter, mentioned EOG Resources, Inc. (NYSE: EOG) and discussed its stance on the firm. EOG Resources, Inc. is a Houston, Texas-based energy company with a $52.7 billion market capitalization. EOG delivered an 81.57% return since the beginning of the year, while its 12-month returns are up by 157.83%. The stock closed at $90.16 per share on October 19, 2021.
Here is what Madison Funds has to say about EOG Resources, Inc. in its Q3 2021 investor letter:
“EOG is a leading oil and gas exploration and production company with attractive exposure to U.S. shale resources. Its energy mix is ~72% oil and liquid natural gas and 28% natural gas. The company has premium acreage that includes over 10,000 potential drilling locations, which provides a long runway for growth. EOG has a disciplined management team that limits operating expenses and capital spending, which results in high free cash flow, a rarity in the Energy sector….”
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Based on our calculations, EOG Resources, Inc. (NYSE: EOG) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. EOG was in 35 hedge fund portfolios at the end of the first half of 2021, compared to 30 funds in the previous quarter. EOG Resources, Inc. (NYSE: EOG) delivered a 22.05% 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.
