ClearBridge Investments, an investment management firm, published its “Dividend Strategy” second quarter 2021 investor letter – a copy of which can be downloaded here. The ClearBridge Dividend Strategy underperformed its S&P 500 Index benchmark during the second quarter. On an absolute basis, the Strategy had gains in 10 of 11 sectors in which it was invested for the quarter. The financials, IT, and industrials sectors mainly contributed to Fund performance, while the communication services, consumer discretionary, and utilities were the main detractors. 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 ClearBridge Investments, the fund mentioned Comcast Corporation (NASDAQ: CMCSA), and discussed its stance on the firm. Comcast Corporation is a Philadelphia, Pennsylvania-based telecommunications company, that currently has a $265.4 billion market capitalization. CMCSA delivered a 10.25% return since the beginning of the year, extending its 12-month revenues to 37.09%. The stock closed at $57.77 per share on July 14, 2021.
Here is what ClearBridge Investments has to say about Comcast Corporation in its Q2 2021 investor letter:
“We funded the shift primarily with trims in Comcast following big gains in this name. Comcast is a long-term holding that have been and remain core holdings. During the quarter, however, we took gains and resized the positions to reflect their current risk-reward post strong increases in the stocks.
Comcast, like Blackstone, has been a meaningful long-term holding whose stock performance has at times lagged its robust fundamental performance. Over the last nine months the stock price caught up some with the fundamentals and looked like it had more room to run. Our thesis on the name evolved, however, following the May 17 announcement that competitor Discovery was merging its operations with Time Warner. This deal positions the new company as a credible competitor to Netflix, Amazon Prime, Hulu and Disney, and results in Comcast being left without the proverbial dance partner in the evolving pay TV/DTC landscape. While we continue to believe Comcast’s cable systems business is well-positioned and that NBCUniversal remains valuable, the competitive dynamic for NBCUniversal has stiffened. Our reduced position size reflects both our continued enthusiasm for many parts of the franchise and emerging concerns given the evolving pay TV/DTC landscape.”
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Based on our calculations, Comcast Corporation (NASDAQ: CMCSA) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. Comcast Corporation was in 88 hedge fund portfolios at the end of the first quarter of 2021, compared to 84 funds in the fourth quarter of 2020. CMCSA delivered a 6.70% 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.
