Alphyn Capital Management, an investment management firm, published its third-quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly portfolio net return of -3.6% was recorded by the fund for the third quarter of 2021, and 9.6% return year-to-date, while its S&P 500 TR benchmark delivered a 15.9% return YTD. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
Alphyn Capital Management, in its Q3 2021 investor letter, mentioned Colfax Corporation (NYSE: CFX) and discussed its stance on the firm. Colfax Corporation is a Wilmington, Delaware-based diversified technology company with a $7.6 billion market capitalization. CFX delivered a 37.63% return since the beginning of the year, while its 12-month returns are up by 91.80%. The stock closed at $51.62 per share on October 29, 2021.
Here is what Alphyn Capital Management has to say about Colfax Corporation in its Q3 2021 investor letter:
“I discussed my reasons for initiating a starter position in Colfax in the 2021 Q1 letter. In August, Mitch Rales, founder of both Danaher and Colfax, purchased $11.5m of shares on the open market at approximately $46 per share, and I increased our position size soon after.
I continue to believe Colfax’s prospects are attractive over the long term as the company demonstrates its ability to execute. For example, the MedTech business expanded its shoulder/knee line with the acquisition of Mathys, opening the European market to the rest of the company. It also created a new business focused on the fast-growing foot and ankle segment through three further acquisitions. Meanwhile, the ESAB welding business increased EBTIDA margins from 15% to 18% through the application of the Colfax Business System processes.”
Photo by Scott Graham on Unsplash
Based on our calculations, Colfax Corporation (NYSE: CFX) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. CFX was in 31 hedge fund portfolios at the end of the first half of 2021, compared to 49 funds in the previous quarter. Colfax Corporation (NYSE: CFX) delivered a 14.79% 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.
