Qualivian Investment Partners, an investment management firm, published its second-quarter 2021 investor letter – a copy of which can be downloaded here. From inception (December 14, 2017) to the end of Q2 2021, the fund has returned 102.8% and 98.5% on a gross and net basis respectively, outperforming the S&P 500 Total Return index by 30.4% and 26.1%, respectively. 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 Qualivian Investment Partners, the fund mentioned PayPal Holdings, Inc. (NASDAQ: PYPL) and discussed its stance on the firm. PayPal Holdings, Inc. is a San Jose, California-based financial technology company with a $337.5 billion market capitalization. PYPL delivered a 23.33% return since the beginning of the year, while its 12-month returns are up by 51.95%. The stock closed at $285.23 per share on September 8, 2021.
Here is what Qualivian Investment Partners has to say about PayPal Holdings, Inc. in its Q2 2021 investor letter:
“PayPal: The company reported a slightly disappointing quarter with revenues growing 19%, missing on the average revenue per transaction due to the accelerated decline in eBay transactions, the higher mix of Braintree transactions, and other impacts from hedging and F/X translations. Given the stock’s significant outperformance in 2020 and heightened expectations coming into the quarter, the stock has been consolidating since the earnings report. Long term we remain bullish on PayPal, given the company’s continued growth in eCommerce end markets, as well as the continued share gains of digital payments/wallets over paper payments.”
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Based on our calculations, PayPal Holdings, Inc. (NASDAQ: PYPL) ranks 9th in our list of the 30 Most Popular Stocks Among Hedge Funds. PYPL was in 143 hedge fund portfolios at the end of the first half of 2021. PayPal Holdings, Inc. (NASDAQ: PYPL) delivered a 7.16% 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.
