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 Valmont Industries, Inc. (NYSE: VMI) and discussed its stance on the firm. Valmont Industries, Inc. is an Omaha, Nebraska-based manufacturing company with a $5.1 billion market capitalization. VMI delivered a 39.94% return since the beginning of the year, while its 12-month returns are up by 93.79%. The stock closed at $244.79 per share on September 3, 2021.
Here is what Artisan Partners has to say about Valmont Industries, Inc. in its Q2 2021 investor letter:
“Valmont is a leading designer and manufacturer of engineered metal products. Its portfolio includes metal and concrete poles for traffic lighting, cell towers and highway signs, utility support structures such as poles for transmission lines and a single-axis solar tracker for utilityscale solar installations and electric-powered, center-pivot irrigation systems that efficiently irrigate fields ranging from 4 to 500 acres. The company is led by a new management team we believe is positioning it to benefit from several secular and cyclical tailwinds. These include accelerating spending for solar, wind and 5G infrastructure, and renewed irrigation investments in international markets—Egypt and Kazakhstan in particular—to ensure more efficient (reducing water usage by 50%), reliable and secure food production following disruptions in food/commodity supplies during the COVID-19 pandemic. With shares trading at an attractive price relative to our private market value estimate and a compelling growth runway ahead, we added to our position during the quarter.”
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Based on our calculations, Valmont Industries, Inc. (NYSE: VMI) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. VMI was in 25 hedge fund portfolios at the end of the first half of 2021, compared to 23 funds in the previous quarter. Valmont Industries, Inc. (NYSE: VMI) delivered an -3.13% 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.
