L1 Capital, an investment management firm, published its ‘L1 Capital International Fund’ third quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly net return of 3.7% was recorded by the fund in the second quarter of 2021, compared to the benchmark return of 3.9% You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
L1 Capital, in its Q3 2021 investor letter, mentioned Mastercard Incorporated (NYSE: MA) and discussed its stance on the firm. Mastercard Incorporated is a Purchase, Harrison, New York-based financial services company with a $355 billion market capitalization. MA delivered a 2.00% return since the beginning of the year, while its 12-month returns are up by 8.19%. The stock closed at $361.36 per share on November 15, 2021.
Here is what L1 Capital has to say about Mastercard Incorporated in its Q3 2021 investor letter:
“Mastercard returned to top 10. We have held Mastercard since inception of the Fund. Over the 6 weeks to 30 September 2021, Mastercard’s share price retreated 10% and we took advantage of what we believe will be a short-term pullback in the share price to add to our investment. Recent weakness in Mastercard’s share price is most likely due to concerns about disintermediation and other pressures caused by growth in ‘Buy now, Pay later’ and other new payment offerings, as well a general market rotation away from higher growth companies in favour of more cyclical businesses.”
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Based on our calculations, Mastercard Incorporated (NYSE: MA) ranks 6th in our list of the 30 Most Popular Stocks Among Hedge Funds. MA was in 156 hedge fund portfolios at the end of the first half of 2021, compared to 151 funds in the previous quarter. Mastercard Incorporated (NYSE: MA) delivered a 0.36% 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.
