Longleaf Partners Fund, a Memphis-based fund under Southeastern Asset Management, published its “Longleaf Partners Fund” third quarter 2021 investor letter – a copy of which can be downloaded here. Longleaf Partners Fund fell 5.70% in the third quarter, while the S&P 500 Index returned 0.58%. The Fund remains ahead of the index year-to-date (YTD), up 16.38% vs. the S&P’s 15.92%. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
Longleaf Partners Fund, in its Q3 2021 investor letter, mentioned CNH Industrial N.V. (NYSE: CNHI) and discussed its stance on the firm. CNH Industrial N.V. is an Amsterdam, Netherlands-based agricultural machinery company with a $25.3 billion market capitalization. CNHI delivered a 45.64% return since the beginning of the year, while its 12-month returns are up by 85.33%. The stock closed at $18.70 per share on November 12, 2021.
Here is what Longleaf Partners Fund has to say about CNH Industrial N.V. in its Q3 2021 investor letter:
“CNH Industrial (2%, 0.11%), a leading farm equipment and commercial vehicle manufacturer globally, was the top contributor for the quarter. CNH reported strong first half results and meaningfully upgraded its sales and FCF guidance for the year. After years of serving as a headwind, the ag cycle is now firmly in CNH’s favor, driven by commodity price strength, healthy farm balance sheets, advanced technology adoption and aging fleet feeding replacement demand. CNH is in the process of spinning off its on-highway business (which includes its IVECO commercial vehicles and FPT powertrain segments), which will create a pure play off-highway company (comprised of the agricultural, construction and specialty vehicles businesses). The spin-off is expected to be completed by early 2022 and should lead to a narrowing of the discount to net asset value once we have two focused companies valued at peer multiples.”
Pixabay/Public Domain
Based on our calculations, CNH Industrial N.V. (NYSE: CNHI) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. CNHI was in 24 hedge fund portfolios at the end of the first half of 2021, compared to 23 funds in the previous quarter. CNH Industrial N.V. (NYSE: CNHI) delivered an 8.41% 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. Recently we came across a high-growth stock that has tons of hidden assets and is trading at an extremely cheap valuation. We go through lists like the 10 best growth stocks to buy 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.
