Cooper Investors, an investment management firm, published its “Cooper Investors Global Equities Fund (Hedged)” second quarter 2021 investor letter – a copy of which can be downloaded here. For the 3 months and 12 months to June 30th, the Fund returned 7.97% and 32.87% respectively, while its benchmark, by comparison returned 7.05% and 35.32% over 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 Cooper Investors, the fund mentioned Sony Group Corporation (NYSE: SONY), and discussed its stance on the firm. Sony Group Corporation is a Minato City, Tokyo, Japan-based multinational conglomerate company, that currently has a $128.7 billion market capitalization. SONY delivered a 1.50% return since the beginning of the year, extending its 12-month returns to 28.23%. The stock closed at $102.62 per share on August 06, 2021.
Here is what Cooper Investors has to say about Sony Group Corporation in its Q2 2021 investor letter:
“Firstly gaming, an area that was already growing in global importance before the pandemic but whose development has only accelerated, with the size of the US videogame industry eclipsing movies and music combined in 2020. The portfolio has exposure to this area through investments in Sony (Sony Interactive, producer of PlayStation consoles and games).The first half of 2021 has seen deal activity reaching record levels, around US$60bn combining both M&A and public offerings. While some giant ecosystem owners like Microsoft have made large bets (e.g. the March US$7.5bn deal for Zenimax) we prefer the cautious approach of Sony taking several smaller but more strategic investments. Examples include the additional US$200mn participation in Epic Games (creator of the Unreal Engine and Fortnite) in March of this year, or the recent purchase of Finland’s oldest gaming studio, Housemarque. The latter case represents a good example of Sony being both a ‘safe haven’ and a source of scale and support for small but proven studios to retain their culture and grow into potential triple-A game developers over time.”
Based on our calculations, Sony Group Corporation (NYSE: SONY) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. SONY was in 27 hedge fund portfolios at the end of the first quarter of 2021, compared to 28 funds in the fourth quarter of 2020. Sony Group Corporation (NYSE: SONY) delivered a 5.75% 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.
