Polen Capital Management, an investment management firm, published its “Polen Global Emerging Markets Growth Fund” second-quarter 2021 investor letter – a copy of which can be downloaded here. The Polen Global Emerging Markets Growth Composite Portfolio (the “Portfolio”) was largely flat for the quarter, returning 0.17% gross of fees. This trailed the MSCI Emerging Markets Index (the “Index”) return of 2.29%. 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 Management, the fund mentioned Yandex N.V. (NASDAQ: YNDX) and discussed its stance on the firm. Yandex N.V. is a Moscow, Russia-based internet company with a $28.3 billion market capitalization. YNDX delivered a 13.90% return since the beginning of the year, while its 12-month returns are up by 26.80%. The stock closed at $79.25 per share on October 1, 2021.
Here is what Polen Capital Management has to say about Yandex N.V. in its Q2 2021 investor letter:
“From a country perspective, weak performance from Russian companies Yandex drove relative performance lower. Yandex is the leading internet search platform in Russia and was the top detractor from both absolute and relative performance this quarter. This underperformance came about despite solid results in 2020 which showed Yandex’s total e-commerce gross merchandise value grew three-fold in 2020 to over ₽56 billion RUB. Specifically, in the fourth quarter of 2020, Yandex saw year-onyear growth of 127%.
In our view, Yandex is one of the highest quality businesses in our investment universe. It has built a defensible competitive moat around its core search business, reinvesting its cash flows in new growth areas to remain relevant in a fast-changing global internet landscape.
We think Yandex benefits from an innovative and forward-thinking management team, which is shaping the development of Russian internet.
With solid execution, Yandex has the potential to transform into an ecosystem which the company’s Chief Technology Officer describes as the “Silicon Valley of Russia.” Yandex remains a topfive holding in the Portfolio.”
Photo by S O C I A L . C U T on Unsplash
Based on our calculations, Yandex N.V. (NASDAQ: YNDX) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. YNDX was in 31 hedge fund portfolios at the end of the first half of 2021, compared to 29 funds in the previous quarter. Yandex N.V. (NASDAQ: YNDX) delivered an 11.12% 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.
