Wasatch Global Investors, an investment management firm, published its “Wasatch Small Cap Growth Fund” second quarter 2021 investor letter – a copy of which can be downloaded here. A return of 6.32% was recorded by the fund’s investor class for the Q2 of 2021, outperforming the benchmarks, Russell 2000 Growth Index, that increased 3.92%, and the Russell 2000 Index that rose to 4.29% 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 Wasatch Global Investors, the fund mentioned Kornit Digital Ltd. (NASDAQ: KRNT) and discussed its stance on the firm. Kornit Digital Ltd. is a Rosh Haayin, Israel-based industrial and commercial printing solutions manufacturer with a $6.4 billion market capitalization. KRNT delivered a -12.29% return since the beginning of the year, while its 12-month returns are up by 33.92%. The stock closed at $146.10 per share on September 16, 2021.
Here is what Wasatch Global Investors has to say about Kornit Digital Ltd. in its Q2 2021 investor letter:
“The top contributor to Fund performance for the second quarter was Kornit Digital Ltd. (KRNT). Based in Israel, the company produces digitalprinting equipment for the apparel industry. Kornit has been benefiting as supply-chain disruptions tied to the coronavirus pandemic hasten the shift to e-commerce and on-demand production solutions. Driven also by the sustainability of Kornit’s eco-friendly technology, the company’s global initiatives have added an expanding number of high-profile customers to its rapidly growing installed base.”
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Based on our calculations, Kornit Digital Ltd. (NASDAQ: KRNT) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. KRNT was in 21 hedge fund portfolios at the end of the first half of 2021, compared to 24 funds in the previous quarter. Kornit Digital Ltd. (NASDAQ: KRNT) delivered a 20.52% 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.
