Harding Loevner, an investment management firm, published its “Global Small Companies Equity Fund” second-quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly net return of 6.82% was recorded by the fund for the Q2 of 2021, beating its Benchmark, the MSCI All Country World Small Cap Index, which returned 5.79% 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 Harding Loevner, the fund mentioned Ollie’s Bargain Outlet Holdings, Inc. (NASDAQ: OLLI) and discussed its stance on the firm. Ollie’s Bargain Outlet Holdings, Inc. is a Harrisburg, Pennsylvania-based discount store company with a $4.1 billion market capitalization. OLLI delivered a -22.76% return since the beginning of the year, while its 12-month returns are up by -27.84%. The stock closed at $63.16 per share on September 24, 2021.
Here is what Harding Loevner has to say about Ollie’s Bargain Outlet Holdings, Inc. in its Q2 2021 investor letter:
“US-based Ollie’s Bargain Outlet managed to maintain their profitability while continuing to grow sales and stores in 2020, a testament to their differentiated value proposition. Ollie’s, a discount retailer, benefitted from increased available closeout inventory and its ability to keep its physical doors open, which it achieved by pivoting toward more essential supplies. The company took advantage of the challenging environment to acquire new customers, growing members of its loyalty program (Ollie’s Army) to 13.6 million.”
Photo by 卓倩 李 on Unsplash
Based on our calculations, Ollie’s Bargain Outlet Holdings, Inc. (NASDAQ: OLLI) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. OLLI was in 21 hedge fund portfolios at the end of the first half of 2021, compared to 24 funds in the previous quarter. Ollie’s Bargain Outlet Holdings, Inc. (NASDAQ: OLLI) delivered a -28.93% 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.
