Alta Fox Capital, an investment management firm, published its third-quarter 2021 investor letter – a copy of which can be downloaded here. A portfolio net return of -0.99% was delivered by the fund for the third quarter of 2021. Since its inception in April 2018, the Fund has produced a gross return of 621.94% and a net return of 419.08% compared to the S&P 500’s return of 73.88%, the Russell 2000’s return of 50.75%, and the Russell Microcap’s return of 56.74%. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
Alta Fox Capital, in its Q3 2021 investor letter, mentioned IDT Corporation (NYSE: IDT) and discussed its stance on the firm. IDT Corporation is a Newark, New Jersey-based fintech, unified cloud communications, and traditional communications services provider with a $1.3 billion market capitalization. IDT delivered a 316.10% return since the beginning of the year, while its 12-month returns are up by 424.80%. The stock closed at $51.43 per share on November 1, 2021.
Here is what Alta Fox Capital has to say about IDT Corporation in its Q3 2021 investor letter:
“In July, we published our research on IDT Corporation (IDT). IDT is the investment we have spent the most cumulative research time on this year. Researching this business has been a fascinating deep dive into various operating businesses and a management team and Board that we believe are some of the greatest capital allocators of all time. In September, we announced a private deal to purchase 2.5% of NRS, a subsidiary of IDT, for $10 million. For reasons highlighted in our original IDT report, we believe NRS has the potential to be worth a couple of billion dollars in a few years, multiples of the entire IDT enterprise value today.”
Based on our calculations, IDT Corporation (NYSE: IDT) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. IDT was in 13 hedge fund portfolios at the end of the first half of 2021, compared to 9 funds in the previous quarter. IDT Corporation (NYSE: IDT) delivered a -0.34% 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.
