Steel City Capital, an investment management firm, published its third-quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly portfolio net return of 0.4% was recorded by the fund for the third quarter of 2021. Year-to-date, the Partnership gained 10.7%, net. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
Steel City Capital, in its Q3 2021 investor letter, mentioned SIGA Technologies, Inc. (NASDAQ: SIGA) and discussed its stance on the firm. SIGA Technologies, Inc. is a New York, New York-based pharmaceutical company with a $544.3 million market capitalization. SIGA delivered a -0.40% return since the beginning of the year, while its 12-month returns are up by 11.57%. The stock closed at $7.15 per share on October 25, 2021.
Here is what Steel City Capital has to say about SIGA Technologies, Inc. in its Q3 2021 investor letter:
“SIGA Technologies (SIGA) continues to trade cheap – roughly 6x forward earnings net of excess cash – despite good contract visibility through 2024, patent protection that should cover another contract cycle through the early 2030’s, and a collection of options related to international sales and potential increases in the size of its contract with the U.S. government. The only rational reason I can determine for the stock trading the way it does is the “market” is low-balling the probability of a contract renewal post-2024 and ascribing absolutely no terminal value whatsoever to the company beyond a second contract cycle. Among all the absurdity in the market, it seems inane to me that in this one case, investors have taken out their HP 12cs and turned their mind to what the world looks like in 2032.”
Photo by Myriam Zilles on Unsplash
Based on our calculations, SIGA Technologies, Inc. (NASDAQ: SIGA) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. SIGA was in 13 hedge fund portfolios at the end of the first half of 2021. SIGA Technologies, Inc. (NASDAQ: SIGA) delivered an 18.69% 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.
