Oakmark Funds: “Our Exposure to ETSY is Currently Established Via Options”

Oakmark Funds, an investment management firm, published its “Oakmark Fund” second quarter 2022 investor letter – a copy that can be downloaded here.  The Oakmark Fund returned -17.8% during the second quarter, underperforming the S&P 500 Index’s return of -16.1%. In constructing portfolios for its clients, the fund seeks out companies that it believes are trading in the market at significant discounts to their underlying value. Go over the fund’s top 5 positions to have a glimpse of its finest picks for 2022.

In its Q2 2022 investor letter, Oakmark Fund mentioned Etsy, Inc. (NASDAQ:ETSY) and explained its insights for the company. Founded in 2005, Etsy, Inc. (NASDAQ:ETSY) is a Brooklyn, New York-based e-commerce company with an $11.7 billion market capitalization. Etsy, Inc. (NASDAQ:ETSY) delivered a -57.68% return since the beginning of the year, while its 12-month returns are down by -52.68%. The stock closed at $92.66 per share on July 20, 2022.

Here is what Oakmark Fund has to say about Etsy, Inc. (NASDAQ:ETSY) in its Q2 2022 investor letter:

“We became interested in Etsy (NASDAQ:ETSY) when Josh Silverman took over as CEO in 2017. The company had long been recognized as a great marketplace, but prior management was not focused on maximizing shareholder value. In short order, Silverman transformed Etsy from a borderline non-profit into a higher-margin, faster-growing enterprise. The pandemic helped accelerate already strong fundamental business results as millions of new customers were introduced to the platform while stuck at home. But like so many other Covid-19 “winners,” Etsy has since fallen deeply out of favor with investors, which prompted us to take a closer look. Following a 75% decline in its stock price, the company now trades for 3.5x next year’s revenue or just a low double-digit multiple of operating profit using our estimate of normalized margins. We believe this is an attractive price to pay for a unique digital marketplace with a long runway for future growth. Note that our exposure to Etsy is currently established via options.”

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Our calculations show that Etsy, Inc. (NASDAQ:ETSY) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Etsy, Inc. (NASDAQ:ETSY) was in 43 hedge fund portfolios at the end of the second quarter of 2022, compared to 47 funds in the previous quarter. Etsy, Inc. (NASDAQ:ETSY) delivered a -13.73% return in the past 3 months.

In June 2022, we also shared another hedge fund’s views on Etsy, Inc. (NASDAQ:ETSY) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q2 page.

Disclosure: None. This article is originally published at Insider Monkey.