Alger, an investment management firm, published its “Alger Weatherbie Specialized Growth Fund” second quarter 2021 investor letter – a copy of which can be downloaded here. During the quarter, the largest portfolio sector weightings were Financials and Health Care. The largest sector overweight was Financials. Class A shares of the Alger Weatherbie Specialized Growth Fund outperformed the Russell 2500 Growth Index during the second quarter of 2021.. 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 Alger Weatherbie Specialized Growth Fund, the fund mentioned Progyny, Inc. (NASDAQ: PGNY), and discussed its stance on the firm. Progyny, Inc. is a United States-based fertility benefits management company, that currently has a $4.1 billion market capitalization. PGNY delivered a 9.67% return since the beginning of the year, extending its 12-month returns to 59.10%. The stock closed at $45.92 per share on August 11, 2021.
Here is what Alger Weatherbie Specialized Growth Fund has to say about Progyny, Inc. in its Q2 2021 investor letter:
“Progyny, Inc. was among the top contributors to performance. Progyny is a leading benefits management company specializing in fertility and family building solutions. It addresses a significant, underserved niche market with unique benefit plan designs, coordinated clinical delivery and a network of carefully selected providers that, in our view, culminates in superior clinical outcomes, significant cost savings and other benefits to constituents. The prevalence of infertility is high, affecting one in eight couples in the U.S., according to the Centers for Disease Control and Prevention. The market for fertility treatments grew at a 10.5% compound annual growth rate (CAGR) from 2013 to 2017.
Progyny reported strong results during the quarter. Revenue grew 51% year over year, ahead of Wall Street estimates by $400,000. Revenue for Progyny’s Fertility Benefit area grew more than 50% while its Pharmacy Benefit revenue grew more than 54%. Earnings before interest, taxes, depreciation and amortization (EBITDA) were also strong, exceeding estimates by $2.5 million. Still early in the selling season, Progyny is seeing a normal pace of sales commitments, and it anticipates that the majority of client decisions may occur in the late summer and early fall for implementations next year.”
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Based on our calculations, Progyny, Inc. (NASDAQ: PGNY) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. PGNY was in 26 hedge fund portfolios at the end of the first quarter of 2021, compared to 24 funds in the fourth quarter of 2020. Progyny, Inc. (NASDAQ: PGNY) delivered a -3.37% 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.
