Polen Capital, an investment management firm, published its “Polen Global Growth” second quarter 2021 investor letter – a copy of which can be downloaded here. A return of 10.37% was delivered by the fund for the Q2 of 2021, outperforming its MSCI All-Country World benchmark that delivered a 7.40% return 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 Polen Capital, the fund mentioned Aon plc (NYSE: AON) and discussed its stance on the firm. Aon plc is a London, United Kingdom-based insurance company with a $63.6 billion market capitalization. AON delivered a 33.55% return since the beginning of the year, extending its 12-month returns to 41.38%. The stock closed at $280.97 per share on August 25, 2021.
Here is what Polen Capital has to say about Aon plc in its Q2 2021 investor letter:
“In the case of Aon, we purchased a small initial position in June. Within days of our initial purchase, the U.S. Department of Justice challenged Aon’s pending merger with Willis Towers Watson, and the stock fell as a result. Outside this event, Aon’s business continues to be well-positioned and operating exceptionally well, in our opinion. We detail our investment case for the business in the Portfolio Activity section. Importantly, while we remain confident that Aon can find a path forward with the U.S. Department of Justice, the consummation of the merger is not required for our investment case.”
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Based on our calculations, Aon plc (NYSE: AON) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. AON was in 68 hedge fund portfolios at the end of the first half of 2021, compared to 72 funds in the previous quarter. Aon plc (NYSE: AON) delivered an 11.04% 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.
