Upslope Capital Management, an investment management firm, published its fourth-quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly portfolio net return of +3.4% was recorded by the fund for the fourth quarter of 2021, compared to the S&P Midcap 400 ETF and the HFRX Equity Hedge Index that delivered +8.0% and +2.7% gains for the same period. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
Upslope Capital Management, in its Q4 2021 investor letter, mentioned MarketAxess Holdings Inc. (NASDAQ: MKTX) and discussed its stance on the firm. MarketAxess Holdings Inc. is a New York, New York-based financial services company with a $13.9 billion market capitalization. MKTX delivered a -10.83% return since the beginning of the year, while its 12-month returns are down by -35.85%. The stock closed at $366.71 per share on February 4, 2022.
Here is what Upslope Capital Management has to say about MarketAxess Holdings Inc. in its Q4 2021 investor letter:
“MarketAxess (MKTX) – Reinitiated Long
MarketAxess is the leading platform for electronic trading of corporate fixed income securities (mostly HighGrade, High Yield, Eurobonds, Emerging Markets). The stock was a Core long of Upslope’s – until early 2021, when it became apparent the company was coming under significant competitive pressure from Tradeweb, a smaller but formative competitor. After being short for most of 2021, we covered in December and reinitiated a modest long position. Why now?
(1) Fundamental outlook has stabilized and may have troughed; evolving revenue mix bodes well for future growth. MKTX faced two key issues in 2021: increasing competitive intensity from Tradeweb
and a generally tough environment (low volatility and incredibly tough comps vs. 2020). On this latter point, we know 2021 will be a far easier comp for MKTX. And, as previously noted, higher volatility ahead seems a reasonable bet.On the competitive front, it’s true that MKTX continues to face challenges – especially within its core High-Grade product. However, the issues are well known and appear to be getting less bad. More mportantly, MKTX finished the year with record high market share in its three “Other Credit” products (High Yield, Emerging Markets, and Eurobonds). I believe these products, which also carry higher fee rates than High-Grade, are underappreciated by investors. Interestingly, 2021 was the first time that Other Credit comprised a majority of trading volumes for MKTX, having risen from 32% in 2014 to 53% in 2021. This should bode well for future growth – especially since most of the Other Credit categories are less “electronified” than High-Grade and thus have even longer runways…” (Click here to see the full text)
Our calculations show that MarketAxess Holdings Inc. (NASDAQ: MKTX) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. MKTX was in 29 hedge fund portfolios at the end of the third quarter of 2021, compared to 31 funds in the previous quarter. MarketAxess Holdings Inc. (NASDAQ: MKTX) delivered a -5.56% return in the past 3 months.
In February 2022, we also shared another hedge fund’s views on MKTX in another article. You can find other 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.
