Nelson Capital Management, an investment management firm, published its second-quarter 2021 investor letter – a copy of which can be downloaded here. In the letter, the fund discussed their economic overview, their asset transactions, tax updates, featured equity, and a special topic about the housing bubble. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.
In the Q2 2021 investor letter of Nelson Capital Management, the fund mentioned The TJX Companies, Inc. (NYSE: TJX) and discussed its stance on the firm. The TJX Companies, Inc. is a Framingham, Massachusetts-based department store company with an $85 billion market capitalization. TJX delivered a 3.22% return since the beginning of the year, extending its 12-month returns to 21.81%. The stock closed at $70.49 per share on August 13, 2021.
Here is what Nelson Capital Management has to say about The TJX Companies, Inc. in its Q2 2021 investor letter:
“In the consumer discretionary sector, we trimmed pandemic winners in favor of companies we believe will outperform in a recovery period. We bought a position in TJX Companies (tkr: TJX), which offers a unique “treasure hunt” experience for its shoppers. Since the pandemic, TJX has learned to operate with less inventory, earned better returns on digital marketing, strengthened relationships with vendors, and cut borrowing costs, all of which will help the company operate more efficiently for years to come.”
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Based on our calculations, The TJX Companies, Inc. (NYSE: TJX) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. TJX was in 63 hedge fund portfolios at the end of the first quarter of 2021, compared to 68 funds in the fourth quarter of 2020. The TJX Companies, Inc. (NYSE: TJX) delivered a -2.68% 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.
