Is Compass (COMP) A Smart Long-Term Buy?

Artisan Partners, a high value-added investment management firm, published its ‘Artisan Small Cap Fund’ third quarter 2021 investor letter – a copy of which can be downloaded here. A return of -1.20% was recorded by its Investor Class: ARTSX, -1.17% by its Advisor Class: APDSX, and -1.13% by its Institutional Class: APHSX for the third quarter of 2021, all above the Russell 2000® Growth Index that delivered a -5.65% return and the Russell 2000® Index that was down by -4.36% 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.

Artisan Small Cap Fund, in its Q3 2021 investor letter, mentioned Compass, Inc. (NYSE: COMP) and discussed its stance on the firm. Compass, Inc. is a New York, New York-based real estate technology company with a $3.6 billion market capitalization. COMP delivered a -25.50% for the past month and it closed at $9.23 per share on December 03, 2021.

Here is what Artisan Small Cap Fund has to say about Compass, Inc.  in its Q3 2021 investor letter:

“We added several new GardenSM positions in Q3 including Compass. Compass is a real estate brokerage firm which provides its agents with a proprietary, end-to-end cloud-based platform. The company helps address the needs of buying and selling homes from client prospecting to closing, which includes customer relationship management, AI-driven prospecting, marketing (digital, social, email, video, print, signage, lead generation), market analysis and collaboration tools. The platform also uses machine learning, artificial intelligence and other advanced data analytics strategies to draw insights across the platform, allowing agents to be more efficient and informed in their selling efforts. We believe this technology advantage is key to the company continuing to disrupt and capture real estate commission market share. We have been impressed with the company’s ability to capture 4% market share since it was founded in 2012 (vs. Redfin, founded in 2002, holding a 1% market share). The company’s profit cycle can also be boosted by adding on additional services such as title insurance referral and escrow services, real estate marketing, home renovation referrals, home insurance and home warranty referrals—all of which we believe have a significantly larger addressable market than commissions (~7X).”

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Based on our calculations, Compass, Inc. (NYSE: COMP) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. COMP was in 25 hedge fund portfolios at the end of the third quarter of 2021, compared to 23 funds in the previous quarter. Compass, Inc. (NYSE: COMP) delivered a -42.88% return in the past 3 months.

Disclosure: None. This article is originally published at Insider Monkey.