L1 Capital, an investment management firm, published its ‘L1 Capital International Fund’ second quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly net return of 11.5% was recorded by the fund in the second quarter of 2021, outperforming the benchmark by 2.1%. 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 L1 Capital, the fund mentioned Intuit Inc. (NASDAQ: INTU) and discussed its stance on the firm. Intuit Inc. is a Mountain View, California-based software company with a $152.4 billion market capitalization. INTU delivered a 46.44% return since the beginning of the year, extending its 12-month returns to 62.48%. The stock closed at $554.02 per share on August 24, 2021.
Here is what L1 Capital has to say about Intuit Inc. in its Q2 2021 investor letter:
“Intuit has been part of the portfolio since inception of the Fund and was featured in the September 2020 Quarterly Report. In December 2020, Intuit completed the acquisition of Credit Karma for around $5 billion. Credit Karma is a consumer technology platform with more than 110 million members in the U.S., Canada and UK. Credit Karma combines technology, personal financial information and network effects to provide financial products, expertise and advice to deliver better financial outcomes to a consumer, or as the company describes it, “To unlock smart money decisions for consumers”. There is the potential for significant value creation through Credit Karma becoming part of the Intuit group of businesses. Intuit aims to leverage the power of its verified income, employment, assets and identity data from TurboTax, Mint and QuickBooks combined with Credit Karma’s credit and debt data to deliver a range of financial products and services such as automated online loan pre-approval letters. Early signs are promising, with Credit Karma delivering record quarterly revenue and 40% of new Credit Karma members coming from the TurboTax franchise. We believe Credit Karma will become the third pillar supporting Intuit’s long-term growth, alongside QuickBooks and TurboTax.”
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Based on our calculations, Intuit Inc. (NASDAQ: INTU) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. INTU was in 66 hedge fund portfolios at the end of the first half of 2021, compared to 68 funds in the previous quarter. Intuit Inc. (NASDAQ: INTU) delivered a 25.62% 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.
