L1 Capital, an investment management firm, published its ‘L1 Capital International Fund’ second quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly net return of 11.5% was recorded by the fund in the second quarter of 2021, outperforming the benchmark by 2.1%. 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 L1 Capital, the fund mentioned Amazon.com, Inc. (NASDAQ: AMZN) and discussed its stance on the firm. Amazon.com, Inc. is a Seattle, Washington-based e-commerce company with a $1.6 trillion market capitalization. AMZN delivered a 1.12% return since the beginning of the year, while its 12-month returns are down by -4.31%. The stock closed at $3,305.78 per share on August 24, 2021.
Here is what L1 Capital has to say about Amazon.com, Inc. in its Q2 2021 investor letter:
“Amazon flipped from being the largest detractor from portfolio performance in the March 2021 quarter, to one of the leading contributors in the June 2021 quarter. We took advantage of negative near-term sentiment in the March 2021 quarter to add to our Amazon investment. We continue to view Amazon as one of the best positioned businesses globally, with its share price still not reflecting fair value.”
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Based on our calculations, Amazon.com, Inc. (NASDAQ: AMZN) ranks 3rd in our list of the 30 Most Popular Stocks Among Hedge Funds. AMZN was in 271 hedge fund portfolios at the end of the first half of 2021, compared to 243 funds in the previous quarter. Amazon.com, Inc. (NASDAQ: AMZN) delivered a 0.90% 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.
