Artisan Partners, a high value-added investment management firm, published its ‘Artisan Small Cap Fund’ second quarter 2021 investor letter – a copy of which can be downloaded here. A return of 4.36% was recorded by its Investor Class: ARTSX, 4.40% by its Advisor Class: APDSX, and 4.41% by its Institutional Class: APHSX for the second quarter of 2021, all above the Russell 2000® Growth Index that delivered a 3.92% return and the Russell 2000® Index that was up by 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 Artisan Partners, the fund mentioned Olo Inc. (NYSE: OLO) and discussed its stance on the firm. Olo Inc. is a New York, New York-based restaurant company with a $5.4 billion market capitalization. OLO delivered a 3.75% return in the past month, and it closed at $37.05 per share on September 3, 2021.
Here is what Artisan Partners has to say about Olo Inc. in its Q2 2021 investor letter:
“We added several new GardenSM positions in Q2 incluing Olo. Olo is a cloud-based software platform helping multilocation restaurant brands manage their digital operations (ordering, delivery, menu options). The company has over 400 brand customers—notably, Wingstop, Shake Shack, Five Guys, Sweetgreens and Chili’s—with 69K active locations. Last year, Olo experienced considerable growth as consumers’ preferences for digital ordering/delivery skyrocketed amid the pandemic. While a climb in vaccination rates has increased mobility more broadly, we believe the restaurant industry’s shift to the digital channel during the pandemic could be long lasting. Olo is in the early stages of penetrating this large addressable market—approximately 300K US restaurant locations in the US chain segment and Olo is only 21% penetrated—and we believe the company can capture share as it adds new products (payments, data/analytics), moves into the small-andmedium-sized business segment and pursues international growth.”
Based on our calculations, Olo Inc. (NYSE: OLO) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. OLO was in 14 hedge fund portfolios at the end of the first half of 2021, compared to 21 funds in the previous quarter. Olo Inc. (NYSE: OLO) delivered a -7.42% 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.
