Choice Equities Capital Management, an investment management firm, published its second-quarter 2021 investor letter – a copy of which can be downloaded here. A net return of +6.2% was recorded by the fund for the Q2 of 2021, outperforming its Russell 2000 benchmark that delivered a +4.3% return, but slightly below the S&P 500 Index that had a +8.6% gain for the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.
In the Q2 2021 investor letter of Choice Equities Capital Management, the fund mentioned Identiv, Inc. (NASDAQ: INVE) and discussed its stance on the firm. Identiv, Inc. is a Santa Ana, California-based physical security and secure identification provider with a $461.7 million market capitalization. INVE delivered a 145.12% return since the beginning of the year, while its 12-month returns are up by 256.15%. The stock closed at $19.54 per share on September 23, 2021.
Here is what Choice Equities Capital Management has to say about Identiv, Inc. in its Q2 2021 investor letter:
“We have one new core position to discuss that I believe has an attractive risk / reward proposition and tremendous potential over the coming years.
INVE – Identiv products, software and systems are designed to connect physical places and objects to the digital ecosystem. With a platform that encompasses Radio Frequency ID (RFID) and Near Field Communications (NFC) technology, the company’s stated mission is to software-enable the entire physical world. In essence, the company seeks to attach its chips or tags to various physical products which enables them to connect to software systems and communicate digitally. In some ways, with these end markets driven from growing use cases by the Internet of Things (IOT) applications, this company looks a little bit like a semiconductor manufacturer. But in others, it looks like the market leader in the manufacture of high-end mission-critical parts with rapidly growing use cases in end markets that have consumables-like consistent demand patterns. With an addressable market that is potentially in the hundreds of billions of units, Identiv stands to benefit from numerous secular trends as a trusted North American-based producer.
In recent years, the company has built a reputation for itself within the industry as a reliable partner. The company produces quality parts and systems by engaging with its customers throughout the complete product life cycle from design to spec to build to service. The company’s premium level products are differentiated from peer offerings, partly due to their high level of customization but also from their wellregarded reputation for security, an important feature in the digital world. The company touts a 100% customer retention level within its RFID business and has an A+ customer list including CVS, a number of entities within the United States government including the Department of Defense and the White House and at least one but potentially two really large companies whose names both begin with the letter A.
The company is organized into two segments, both of which are built around the company’s expertise in RFID and NFC technology applications. The Identity segment is focused on things. Product offerings include tags, antennas, in-lays and readers with embedded RFID solutions to make physical devices more responsive, secure, feature-rich, interactive and customer-connected. These solutions address a wide range of IoT applications from things like access control to asset tracking, product authenticity, customer engagement, tamper detection and transportation access. For example, by placing a reader near a tag, you could learn about a product’s travel history, recent storage temperature or access a website that contains the product’s instructions.” (Click here to see the full text)
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Based on our calculations, Identiv, Inc. (NASDAQ: INVE) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. INVE was in 7 hedge fund portfolios at the end of the first half of 2021. Identiv, Inc. (NASDAQ: INVE) delivered a 27.87% 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.
