Shadowridge Value LLC, a long-only, value-oriented registered investment advisor, published its fourth-quarter 2021 investor letter – a copy of which can be seen here. Returns for the managed client accounts ranged from -2.7% to 0.5%, net of fees, from the various inception dates through year-end 2021. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
Shadowridge Value LLC, in its Q4 2021 investor letter, mentioned Redfin Corporation (NASDAQ: RDFN) and discussed its stance on the firm. Redfin Corporation is a Seattle, Washington-based full-service real estate brokerage with a $2.0 billion market capitalization. RDFN delivered a -49.02% return since the beginning of the year, while its 12-month returns are down by -68.47%. The stock closed at $19.57 per share on March 04, 2022.
Here is what Shadowridge Value LLC has to say about Redfin Corporation in its Q4 2021 investor letter:
“Redfin (RDFN) – A newer investment I have made while attempting to capitalize on the recent market declines is Redfin. Unfortunately, if I had the foresight to wait another couple weeks, I could’ve built our positions in the company at a 30%+ discount to our cost basis. While I don’t think there is much of a lesson to take away from short term market gyrations, it has made me reconsider how quickly I attempt to build an entire position. Patience is key. Based on my track record however, I half-jokingly have concluded my base assumption should be that if I’m buying stock, shares will continue lower and if I not buying stock, shares will immediately march upwards!
In line with their stated mission, Redfin redefines the residential real estate experience in the consumer’s favor. They do this by utilizing a technology stack that helps removes legacy transaction costs and benefits from the high visibility of their popular online portal. The Redfin website provides incredibly low-cost lead generation. This in turn enables the company to offer a compelling customer value proposition as a full-suite brokerage at significantly reduced commissions. The typical real estate brokerage earns 5-6% on a real estate transaction whereas Redfin earns 4% on a transaction if both ends of the sale (listing and buyside) are handled by them. Listing fees are only 1.5%, as low as 1% in some cases.
1-2% commission reductions may not sound like much, but that’s meaningful savings when it comes to a high-priced item like a home! Real estate remains an isolated industry where far too much of the economics are still siphoned off by middlemen hiding behind archaic practices. It would be one thing to forgo the savings if the Redfin service level were vastly inferior (and in fact competition will claim it is), but I believe Redfin to be a far better, easier, more efficient, and cheaper solution for consumers. With just a ~1.2% market share in the massive $2 trillion (by volume) / $100 billion (assuming 5% commission) US residential real brokerage industry, Redfin has plenty of room to rapidly expand operations and take market share in its core service for many years to come…” (Click here to see the full text)
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Our calculations show that Redfin Corporation (NASDAQ: RDFN) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. RDFN was in 18 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 12 funds in the previous quarter. Redfin Corporation (NASDAQ: RDFN) delivered a -48.93% return in the past 3 months.
In July 2021, we published an article that includes RDFN in the 10 Best Up and Coming Stocks to Invest In. You can find more than 100 investor letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.
Disclosure: None. This article is originally published at Insider Monkey.
