Wedgewood Partners, an investment management firm, published its second quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly portfolio return of 11.8% was recorded by the fund for the first half of 2021, outperforming the S&P 500 that delivered an 8.6% return for the same period, but slightly below the 11.9% gain of Russell 1000 Growth Index. You can view the fund’s top 5 holdings to have an idea about their top bets for 2021.
In the Q2 2021 investor letter of Wedgewood Partners, the fund mentioned Edwards Lifesciences Corporation (NYSE: EW), and discussed its stance on the firm. Edwards Lifesciences Corporation is an Irvine, California-based medical technology company, that currently has a $66.4 billion market capitalization. EW delivered a 17.20% return since the beginning of the year, extending its 12-month revenues to 44.27%. The stock closed at $106.92 per share on July 16, 2021.
Here is what Wedgewood Partners has to say about Edwards Lifesciences Corporation in its Q2 2021 investor letter:
“Edwards Lifesciences returned to growth after a brief and shallow slowdown in sales caused by the pandemic. Edwards’ transcatheter aortic valve replacement (TAVR) is increasingly becoming the standard of care for treating nearly all those with symptomatic severe aortic stenosis, rendering risk categories moot. However, the Company’s flagship TAVR therapies continue to gain approval for patients who are considered to be at lower risk of encountering complications from open-heart surgical valve replacement. Combined with a recent competitor exit, Edwards should be able to drive very healthy double-digit revenue growth in 2021 as its TAVR platform gains procedural share and market share.”
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Based on our calculations, Edwards Lifesciences Corporation (NYSE: EW) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. Edwards Lifesciences Corporation was in 36 hedge fund portfolios at the end of the first quarter of 2021, compared to 38 funds in the fourth quarter of 2020. EW delivered a 20.11% 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.
