Artisan Partners, a high value-added investment management firm, published its ‘Artisan Small Cap Fund’ second quarter 2021 investor letter – a copy of which can be downloaded here. A return of 4.36% was recorded by its Investor Class: ARTSX, 4.40% by its Advisor Class: APDSX, and 4.41% by its Institutional Class: APHSX for the second quarter of 2021, all above the Russell 2000® Growth Index that delivered a 3.92% return and the Russell 2000® Index that was up by 4.29% 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 ShockWave Medical, Inc. (NASDAQ: SWAV) and discussed its stance on the firm. ShockWave Medical, Inc. is a Santa Clara, California-based medical device company with a $7.9 billion market capitalization. SWAV delivered a 118.71% return since the beginning of the year, while its 12-month returns are up by 268.62%. The stock closed at $226.15 per share on September 2, 2021.
Here is what Artisan Partners has to say about ShockWave Medical, Inc. in its Q2 2021 investor letter:
“Turning to our individual holdings, among our top Q2 contributors (includes) Shockwave Medical. Shockwave is an early stage medical device company developing and commercializing products to treat calcified cardiovascular disease across two primary end markets: peripheral artery disease and coronary artery disease. Both diseases reduce blood flow to the heart (coronary) and limbs (peripheral). The company recently received FDA approval for its coronary intravascular lithotripsy catheter, which is used to break up hard materials restricting blood flow to the heart utilizing the company’s proprietary technology (IVL) which cracks calcium in arterial vessels through the application of sound waves. This method of treatment allows physicians to access and treat patients more gently. With the catheter similar to the current method of balloon angioplasty, and because there is generous reimbursement for adoption of the technology, we believe the company is in the early stages of a meaningful profit cycle.”
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Based on our calculations, ShockWave Medical, Inc. (NASDAQ: SWAV) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. SWAV was in 27 hedge fund portfolios at the end of the first half of 2021, compared to 17 funds in the previous quarter. ShockWave Medical, Inc. (NASDAQ: SWAV) delivered a 33.80% 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.
