Artisan Partners, a high value-added investment management firm, published its “Artisan Value Fund” second quarter 2021 investor letter – a copy of which can be downloaded here. A return of 7.77% was recorded by its Investor Class: ARTLX, 7.81% by its Advisor Class: APDLX, and 7.87% by its Institutional Class: APHLX for the second quarter of 2021, all beating the Russell 1000® Value Index that delivered a 5.21% return, but below the Russell 1000® Index that gained 8.54% 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 Schlumberger Limited (NYSE: SLB) and discussed its stance on the firm. Schlumberger Limited is a Houston, Texas-based oilfield services company with a $40.5 billion market capitalization. SLB delivered a 32.87% return since the beginning of the year, while its 12-month returns are up by 74.53%. The stock closed at $27.15 per share on September 22, 2021.
Here is what Artisan Partners has to say about Schlumberger Limited in its Q2 2021 investor letter:
“Schlumberger, the world’s largest oil services company, is performing well in a competitive marketplace. New management has driven the company’s refocused efforts to increase free cash flow and expand profit margins, a task made easier with the cooperating price of oil. We like that the business model is becoming nimbler and more adaptive to market forces, as evidenced by its recent focus on contributing to the production of cleaner energy. Additionally, company management has instituted a disciplined approach to spending which we believe should benefit shareholders over the long term. However, there is no denying that the company is dependent upon the volatile spending cycle of its exploration and production customers and the associated commodity price. We expect Schlumberger to successfully navigate market volatility and anticipate the company will continue to increase its market share as global economic growth and travel rebound.
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Based on our calculations, Schlumberger Limited (NYSE: SLB) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. SLB was in 41 hedge fund portfolios at the end of the first half of 2021, compared to 50 funds in the previous quarter. Schlumberger Limited (NYSE: SLB) delivered a -12.78% 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.
