Saga Partners, an investment management firm, published its second-quarter 2022investor letter – a copy of which can be seen here. During the second quarter of 2022, the Saga Portfolio (“the Portfolio”) declined 56.3% net of fees. This compares to the overall decrease for the S&P 500 Index, including dividends, of 16.1%. The cumulative return since inception on January 1, 2017, for the Saga Portfolio, is -7.3% net of fees compared to the S&P 500 Index of 86.8%. The annualized return since inception for the Saga Portfolio is -1.4% net of fees compared to the S&P 500’s 12.0%. Go over the fund’s top 5 positions to have a glimpse of its finest picks for 2022.
In its Q2 2022 investor letter, Saga Partners mentioned Redfin Corporation (NASDAQ:RDFN) and explained its insights for the company. Founded in 2002, Redfin Corporation (NASDAQ:RDFN) is a Seattle, Washington-based real estate brokerage with an $878.4 million market capitalization. Redfin Corporation (NASDAQ:RDFN) delivered a -78.90% return since the beginning of the year, while its 12-month returns are down by -82.78%. The stock closed at $8.10 per share on September 13, 2022.
Here is what Saga Partners has to say about Redfin Corporation (NASDAQ:RDFN) in its Q2 2022 investor letter:
“The Portfolio first bought Redfin in Q2’21. Redfin’s competitive advantage stems from its ability to integrate the demand aggregated from their web portal with full-time salaried agents. Because Redfin agents do not have to prospect for demand, they are more productive than traditional agents, providing Redfin with a lower cost per transaction compared to traditional real estate brokerages. The two other major real estate web portals, Zillow and Realtor.com, have different business models where third party agents advertise on their website. The web portals do not help agents become more productive but simply generate leads and therefore are part of the advertising costs of the traditional real estate value chain.
With barely a year of ownership, we have not really had enough time to evaluate longer-term trends since first buying Redfin, but in our first year, results have come in below what I would expect long-term trends to be. Since COVID, the housing market has been all over the place. It essentially froze during Q2’20, rebounded in H2’20 through 2021, and has since declined in 2022. Home prices have skyrocketed after COVID as housing inventory couldn’t keep up with demand and reached unsustainable levels as measured by historic values to household income levels. As mortgage rates have increased, home prices have barely dropped, causing home affordability and demand to drop. The overall housing market has continued to struggle in the first half of the year. Existing home sales continue to fall, with July declining 19% year-over-year. As a result, Redfin’s real estate transactions fell 4% year-over-year in Q2’22, the first decline (with the exception of Q2’20) since being a public company…” (Click here to see the full text)
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Our calculations show that Redfin Corporation (NASDAQ:RDFN) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Redfin Corporation (NASDAQ:RDFN) was in 19 hedge fund portfolios at the end of the second quarter of 2022, compared to 23 funds in the previous quarter. Redfin Corporation (NASDAQ:RDFN) delivered a -0.37% return in the past 3 months.
In May 2022, we also shared another hedge fund’s views on Redfin Corporation (NASDAQ:RDFN) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q2 page.
Disclosure: None. This article is originally published at Insider Monkey.
