Alger, an investment management firm, published its “Alger Small Cap Focus Fund” second quarter 2021 investor letter – a copy of which can be downloaded here. During the quarter, the largest portfolio sector weightings were Health Care and Information Technology. The largest sector overweight was Health Care. Class A shares of the Alger Small Cap Focus Fund outperformed the Russell 2000 Growth Index during the second quarter of 2021. 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 Alger Small Cap Focus Fund, the fund mentioned ShockWave Medical, Inc. (NASDAQ: SWAV), and discussed its stance on the firm. ShockWave Medical, Inc. is a Santa Clara, California-based medical devices manufacturer, that currently has a $6.15 billion market capitalization. SWAV delivered a 68.92% return since the beginning of the year, extending its 12-month returns to 221.29%. The stock closed at $175.20 per share on August 11, 2021.
Here is what Alger Small Cap Focus Fund has to say about ShockWave Medical, Inc. in its Q2 2021 investor letter:
“Shockwave Medical, Inc. was among the top contributors to performance during the second quarter. Shockwave Medical is focused on developing and commercializing products to transform the way calcified cardiovascular disease is treated. Shockwave technology treats atherosclerotic cardiovascular disease through the use of its differentiated and proprietary local delivery of sonic pressure for the treatment of calcified plaque, which is known as intravascular lithotripsy (or IVL). The IVL technology is minimally invasive and easy-to-use and significantly improves patient outcomes in both peripheral artery disease and coronary artery disease. During the second quarter, shares of Shockwave performed strong after the company reported better-than-expected earnings for the first three months of 2021, with revenue exceeding consensus expectations. Shockwave issued initial 2021guidance that was also materially better than consensus expectations. The company is showing strong traction from the launch of its IVL technology for treating coronary artery disease, while demand for the use of IVL in peripheral artery disease remains strong.”
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Based on our calculations, ShockWave Medical, Inc. (NASDAQ: SWAV) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. SWAV was in 17 hedge fund portfolios at the end of the first quarter of 2021, compared to 22 funds in the fourth quarter of 2020. ShockWave Medical, Inc. (NASDAQ: SWAV) delivered a 17.98% 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.
