ClearBridge Investments, an investment management firm, published its “Sustainability Leaders Strategy” second quarter 2021 investor letter – a copy of which can be downloaded here. The ClearBridge Sustainability Leaders Strategy underperformed its Russell 3000 Index benchmark during the second quarter. On an absolute basis, the Strategy had gains in eight of 10 sectors in which it was invested (out of 11 sectors total). 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 ClearBridge Investments, 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 with a $5.08 billion market capitalization. PGNY delivered a 34.39% return since the beginning of the year, while its 12-month returns are up by 97.47%. The stock closed at $56.00 per share on September 30, 2021.
Here is what ClearBridge Investments has to say about Progyny, Inc. in its Q2 2021 investor letter:
“Two additional names in the health care sector in the quarter, partially funded with a sale, made strong contributions and helped push our relative exposure to the sector from underweight to overweight. We also added Progyny, a leading provider of fertility benefit management services to self-insured employers. This is an increasingly important, albeit relatively underpenetrated benefit for employers, particularly those seeking to improve access and support diversity, inclusion and equity initiatives.
Progyny realizes substantially better outcomes for patients (higher pregnancy rates, lower miscarriage rates and lower twins rates), which leads to significant cost savings for payers along with the obvious better outcomes for patients and families.
Progyny’s mission is to improve the employee experience around fertility issues in order to aid clients in employee recruitment and retention. The company offers a rare win-win-win for employers, employees and health systems, with clear savings and quality improvements. With the company still relatively underpenetrated in its total addressable market and with logical adjacencies (labs/diagnostics, return-to-work support) and demographic tailwinds (families getting started later leads to higher infertility risk), Progyny should sustain its elevated top-line growth profile.”
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Based on our calculations, Progyny, Inc. (NASDAQ: PGNY) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. PGNY was in 39 hedge fund portfolios at the end of the first half of 2021, compared to 26 funds in the previous quarter. Progyny, Inc. (NASDAQ: PGNY) delivered a -4.85% 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.
