Wasatch Core Growth Fund recently released its Q3 2020 Investor Letter, a copy of which you can download here. The fund posted a return of 6.61% for the quarter, outperforming its benchmark, the Russell 2000 Index which returned 4.93% in the same quarter. You should check out Wasatch’s top 5 stock picks for investors to buy right now, which could be the biggest winners of 2021.
In the Q3 2020 Investor Letter, Wasatch highlighted a few stocks and Avalara Inc. (NYSE:AVLR) is one of them. Avalara Inc. (NYSE:AVLR) is a software company. Year-to-date, Avalara Inc. (NYSE:AVLR) stock gained 150.9% and on December 22nd it had a closing price of $183.79. Here is what Wasatch said:
“Another tech company we like is Avalara, Inc. (AVLR), which provides sales-tax management, filing and payment software—including a webbased system to integrate accounting and business applications that span multiple platforms world-wide. The company also offers consulting, training courses and technical-support services.
At Wasatch, we’ve had successful investments in software-based human-resources (HR) and payroll companies. One of the reasons for the success is that high-quality HR and payroll companies tend to develop long-term relationships with their customers because the complex nuances of personnel management and recordkeeping are powerful incentives to maintain the status quo.
As for Avalara, we think sales-tax management is even more complex than HR and payroll. Just imagine having to keep track of tax requirements in thousands of international jurisdictions for different industries and for different products and services. If Avalara performs its functions well—and we believe it does—why would a customer leave? And why would a potential competitor think it could catch up with Avalara’s detailed local knowledge and already-established software integrations? Also, we believe Avalara’s potential growth is enormous because more and more businesses around the world are entering the formal economy and there are many additional jurisdictions for the company to cover.”
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In Q3 2020, the number of bullish hedge fund positions on Avalara Inc. (NYSE:AVLR) stock increased by about 24% from the previous quarter (see the chart here), so a number of other hedge fund managers believe in Avalara’s growth potential. Our calculations showed that Avalara Inc. (NYSE:AVLR) isn’t ranked among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
Video: Top 5 Stocks Among Hedge Funds
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website:
Disclosure: None. This article is originally published at Insider Monkey.
