ClearBridge Investments, an investment management firm, published its “Value Equity Strategy” fourth quarter 2021 investor letter – a copy of which can be downloaded here. The ClearBridge Value Equity Strategy underperformed the benchmark Russell 1000 Value Index in the fourth quarter. On an absolute basis, the Strategy posted gains in 10 of 11 sectors in which it was invested during the quarter. The sole detractor from the Strategy’s performance was the communication services sector, while positive contributors included the financials and health care sectors. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
ClearBridge Investments Value Equity Strategy, in its Q4 2021 investor letter, mentioned Pfizer Inc. (NYSE:PFE) and discussed its stance on the firm. Founded in 1849, Pfizer Inc. (NYSE:PFE) is a New York, New York-based pharmaceutical industry company with a $287.6 billion market capitalization, and is currently spearheaded by its CEO, Albert Bourla. Pfizer Inc. (NYSE:PFE) delivered a -13.73% return since the beginning of the year, while its 12-month returns are up by 41.30%. The stock closed at $50.94 per share on April 04, 2022.
Here is what ClearBridge Investments Value Equity Strategy has to say about Pfizer Inc. (NYSE:PFE) in its Q4 2021 investor letter:
“While the level of general turnover abated as we progressed through 2021, it remained high in one area: post-COVID-19 recovery plays. The concept behind this investment thesis was, and still is, straightforward: with the advent of effective vaccines, the path from pandemic to endemic is just a matter of time. As this transition occurs, the estimated excess savings of over $2 trillion built up on U.S. consumer balance sheets will unlock dramatic pent-up demand for experiences, especially global travel. This investment case seemed especially compelling when the Pfizer vaccine positively surprised markets in November 2020. As a result, we made post-COVID-19 stocks (which were trading well below our estimate of recovery value) a sizable theme within the portfolio. We understood this to be a more aggressive tilt in positioning because it required a major improvement in demand to catalyze fundamentals and drive price toward higher business values. While we accepted that recovery would not be smooth and that it would take time to deploy vaccines both domestically and globally, we decided that recovery was the logical path of least resistance and we were being well compensated for these risks.
What we did not account for, however, was vaccine hesitancy and the risk of further infection waves. As a result, the first variant wave, Delta, was a negative surprise to both the market and our team. When the risk surfaced, we immediately updated our probability-driven models and debated how we should react. The resulting conclusion was that the recovery would be delayed and that we should reduce our exposure quickly, subsequently targeting the most aggressive recovery stocks such as cruise lines. We again acted swiftly and decisively to the positive surprise that Pfizer had delivered a high-efficacy antiviral COVID-19 pill. This pill should greatly reduce COVID-19 severity risks globally, increasing the probability of a global travel recovery in 2022. While this is still true, the emergence of the highly mutated Omicron variant set off another infection wave which spurred us to again act quickly and further reduce our risk exposure. This back-and-forth may sound exhausting, but it highlights our compulsion to act if we determine a surprise has a large enough impact on the probabilities that power our valuation-driven investment cases.
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Our calculations show that Pfizer Inc. (NYSE:PFE) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. Pfizer Inc. (NYSE:PFE) was in 83 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 74 funds in the previous quarter. Pfizer Inc. (NYSE:PFE) delivered a -6.58% return in the past 3 months.
In March 2022, we published an article that includes Pfizer Inc. (NYSE:PFE) in the 10 Cheap Stocks Hedge Funds Are Talking About. You can find more than 100 investor letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.
Disclosure: None. This article is originally published at Insider Monkey.
