Arch Capital Management, an investment management firm, published its first-quarter 2021 investor letter – a copy of which can be downloaded here. The fund holds a concentrated collection of high-quality businesses purchased at prices where we believe forward returns can exceed a rate of 15% a year. With the fund down 15.3% since inception, the market seems to not agree with its assessments. Try to spend some time taking a look at the fund’s top 5 holdings to be informed about their best picks for 2022.
In its Q1 2022 investor letter, Arch Capital Management mentioned Wix.com Ltd. (NASDAQ:WIX) and explained its insights for the company. Founded in 2006, Wix.com Ltd. (NASDAQ:WIX) is a Tel Aviv-Yafo, Israel-based web development company with a $4.0 billion market capitalization. Wix.com Ltd. (NASDAQ:WIX) delivered a -55.77% return since the beginning of the year, while its 12-month returns are down by -76.57%. The stock closed at $69.79 per share on July 06, 2022.
Here is what Arch Capital Management has to say about Wix.com Ltd. (NASDAQ:WIX) in its Q1 2022 investor letter:
“The fund was down 15.3% since inception, the market does not agree with our assessments. The negative performance can be attributed to two stocks in the portfolio, Wix (NASDAQ:WIX) and Spotify (NYSE:SPOT), which have a negative contribution to fund returns of 5.39% and 9.19%, respectively, as of this writing. Take those stocks out and fund returns would be positive since inception.
This isn’t to make an excuse for the fund’s poor returns. We made the choice to buy Wix and Spotify in 2021, and so far the market has punished us for it. But that is in the past. All that we can do right now is evaluate potential investments and our confidence in whether they can produce forward returns of 15% or more.
Wix is a global website building company based in Israel that’s valued at $4.6 billion today. Put simply, Wix’s intuitive, drag-and-drop platform allows anyone to build and manage their own custom website without needing to write a single line of code. Though Wix has also developed some promising professional tools, its flagship DIY platform still comprises the majority of revenue, so that’s where we’ll focus.
A bit of background:
Prior to Wix, many small businesses lacked the digital expertise or know-how to establish an internet presence. While there were some available solutions like WordPress and other open-source platforms, the complexity and required security maintenance often forced small businesses to consult the help of external website design firms instead. However, with Wix, there’s no longer the need (for most businesses). Between Wix’s ease of use, professional-looking designs, and holistic suite of operational tools, small businesses now have everything they need to build and maintain their digital presence on their own.
Wix’s approach has certainly been well adopted in recent years as is evident by its rapidly increasing market share. Today, Wix is home to more than 6 million premium subscriptions (paying users), and the company powers an estimated 3.4% of all websites that use a content management system – versus just 0.6% five years ago…” (Click here to see the full text)
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Our calculations show that Wix.com Ltd. (NASDAQ:WIX) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Wix.com Ltd. (NASDAQ:WIX) was in 24 hedge fund portfolios at the end of the first quarter of 2022, compared to 29 funds in the previous quarter. Wix.com Ltd. (NASDAQ:WIX) delivered a -29.58% return in the past 3 months.
In May 2022, we also shared another hedge fund’s views on Wix.com Ltd. (NASDAQ:WIX) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.
Disclosure: None. This article is originally published at Insider Monkey.
