ClearBridge Investments, an investment management firm, published its “Sustainability Leaders Strategy” second quarter 2021 investor letter – a copy of which can be downloaded here. The ClearBridge Sustainability Leaders Strategy underperformed its Russell 3000 Index benchmark during the second quarter. On an absolute basis, the Strategy had gains in eight of 10 sectors in which it was invested (out of 11 sectors total). 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 ClearBridge Investments, the fund mentioned Walmart Inc. (NYSE: WMT) and discussed its stance on the firm. Walmart Inc. is a Bentonville, Arkansas-based retail company with a $382.1 billion market capitalization. WMT delivered a -4.93% return since the beginning of the year, while its 12-month returns are down by -2.46%. The stock closed at $139.38 per share on October 01, 2021.
Here is what ClearBridge Investments has to say about Walmart Inc. in its Q2 2021 investor letter:
“The pandemic has created challenges for businesses large and small; one major challenge for large essential retailers such as ClearBridge holdings Home Depot, Walmart and Costco has been ensuring adequate staffing to meet demand under trying conditions. All three instituted enhanced pay practices during the pandemic, with raises, unplanned bonuses and other benefits helping compensate employees for their efforts in a difficult environment. In September 2020 Walmart raised wages for 165,000 employees, including a number of entry positions to $15 an hour. It followed this in February with a raise for 425,000 workers that moved its average pay above $15 an hour.”
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Based on our calculations, Walmart Inc. (NYSE: WMT) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. WMT was in 71 hedge fund portfolios at the end of the first half of 2021, compared to 58 funds in the previous quarter. Walmart Inc. (NYSE: WMT) delivered a -2.18% 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.
