Artisan Partners, a high value-added investment management firm, published its ‘Artisan Mid Cap Fund’ second quarter 2021 investor letter – a copy of which can be downloaded here. A return of 10.45% was recorded by its Investor Class: ARTMX, 10.46% by its Advisor Class: APDMX, and 10.52% by its Institutional Class: APHMX, in the second quarter of 2021, all below the Russell Midcap® Growth Index that delivered an 11.07% return, but outperforming the Russell Midcap® Index that was up by 7.50% for the same period. You can take a look at the fund’s top 5 holdings to have an idea about their top bets for 2021.
In the Q2 2021 investor letter of Artisan Partners, the fund mentioned BioNTech SE (NASDAQ: BNTX) and discussed its stance on the firm. BioNTech SE is a Germany-based biotechnology company with a $79.6 billion market capitalization. BNTX delivered a 303.01% return since the beginning of the year, while its 12-month returns are up by 454.20%. The stock closed at $332.50 per share on September 1, 2021.
Here is what Artisan Partners has to say about BioNTech SE in its Q2 2021 investor letter:
“Among our top contributors as BioNTech. Shares of BioNTech doubled in Q2 as the scientific and commercial success of the company’s highly effective COVID-19 mRNA vaccine came into sharper focus. The emergence of mRNA vaccines—which instruct cells to make a protein to trigger an immune response instead of putting a weakened or inactivated germ into our bodies—from BioNTech, Pfizer and Moderna have proven instrumental in combatting the COVID-19 pandemic. The companies’ compelling clinical data have made mRNA vaccines the preferred shots globally, prompting BioNTech and its partner Pfizer to expand manufacturing capacity rapidly to keep up with demand. The company now expects to be able to supply up to three billion doses in 2021, a remarkable achievement.
While we have long admired BioNTech’s management, technology platform and deep pipeline of novel cancer therapies, the dramatic stock price increase in Q2 causes some challenges. On one hand, the company is now in an incredibly strong financial position—profits from COVID-19 vaccines will likely give BioNTech massive cash reserves with which to invest aggressively in the broader potential of mRNA therapeutics. On the other hand, we can expect COVID-19 sales to decline sharply longer term, though the shape of this curve is up for debate based on how often booster shots will be needed. We are being prudent in our effort to appraise and value the windfall of profits over the intermediate term while balancing the potential for declining profits for several years post-pandemic (even if the company’s cancer pipeline progresses nicely). We have trimmed our position size to manage this risk accordingly.”
Photo by Spencer Davis on Unsplash
Based on our calculations, BioNTech SE (NASDAQ: BNTX) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. BNTX was in 20 hedge fund portfolios at the end of the first half of 2021, compared to 18 funds in the previous quarter. BioNTech SE (NASDAQ: BNTX) delivered a 52.58% 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.
