ClearBridge Investments, an investment management firm, published its “Aggressive Growth Strategy” first quarter 2021 investor letter – a copy of which can be downloaded here. The ClearBridge Aggressive Growth Strategy outperformed its Russell 3000 Growth Index benchmark in the first quarter. On an absolute basis, the Strategy generated gains across seven of the eight sectors in which it was invested (out of 11 sectors total). You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.
ClearBridge Investments, in its Q1 2021 investor letter, mentioned Guardant Health, Inc. (NASDAQ: GH), and shared their insights on the company. Guardant Health, Inc. is a Redwood City, California-based precision oncology company that currently has a $12.6 billion market capitalization. Since the beginning of the year, GH delivered a -2.75% return, while its 12-month gains are up by 166.72%. As of June 23, 2021, the stock closed at $127.64 per share.
Here is what ClearBridge Investments has to say about Guardant Health, Inc. in its Q1 2021 investor letter:
“While equity participation has been broadening, not all sectors and industries have benefited. Health care, which represents the Strategy’s second largest overweight, has lagged in recent months but we believe positive vaccine development and upcoming clinical news for other therapeutics will eventually lead to greater recognition by investors. Testing and diagnostics provider Guardant Health has appreciated significantly due to strong growth and new product introductions since we added it to the portfolio last year…”
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Our calculations show that Guardant Health, Inc. (NASDAQ: GH) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the first quarter of 2021, Guardant Health, Inc. was in 41 hedge fund portfolios, compared to 52 funds in the fourth quarter of 2020. GH delivered a -6.14% 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.
