Weitz Investment Management, an investment management firm, published its “Value Fund” second quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly return of +9.22% was recorded by the fund for the second quarter of 2021, outperforming its S&P 500 and Russell 1000 benchmark that delivered a +8.55% and +8.54% return respectively 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 Weitz Investment Management, the fund mentioned Roper Technologies, Inc. (NYSE: ROP) and discussed its stance on the firm. Roper Technologies, Inc. is a Sarasota, Florida-based diversified industrial company with a $49.4 billion market capitalization. ROP delivered an 8.85% return since the beginning of the year, while its 12-month returns are up by 16.18%. The stock closed at $471.87 per share on September 13, 2021.
Here is what Weitz Investment Management has to say about Roper Technologies, Inc. in its Q2 2021 investor letter:
“We added Roper Technologies to the portfolio during the quarter. Roper is a collection of 47 high-quality operating companies, with a unique, easily identified, and sustainable culture and capital allocation strategy. Weitz director of research Barton Hooper’s high-level description of the Roper culture is “think long-term, do better than last year, drive organic growth, operate with complete transparency, and hire people better than you.” The company is also well known for its Cash Return on Investment focus. This framework drives a disciplined acquisition program designed to surface very good businesses run by excellent managers who fit the decentralized culture.
Roper pivoted in recent years to niche software and marketplace companies, both fertile areas in which our research team is well versed. After the recent Vertafore software acquisition, the largest in Roper’s history, our team refreshed our quality score and valuation of the company. We think the company can grow revenues and cash flows at a healthy rate over our investing horizon, from a combination of organic growth, margin expansion and prudent capital deployment. With top-tier management and great raw material, Roper is well positioned to deliver solid returns to long-term owners.”
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Based on our calculations, Roper Technologies, Inc. (NYSE: ROP) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. ROP was in 41 hedge fund portfolios at the end of the first half of 2021, compared to 42 funds in the previous quarter. Roper Technologies, Inc. (NYSE: ROP) delivered a 1.37% 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.
