L1 Capital, an investment management firm, published its ‘L1 Capital International Fund’ second quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly net return of 11.5% was recorded by the fund in the second quarter of 2021, outperforming the benchmark by 2.1%. You can take a look at the fund’s top 5 holdings to have an idea of their top bets for 2021.
In the Q2 2021 investor letter of L1 Capital, the fund mentioned Insight Enterprises, Inc. (NASDAQ: NSIT) and discussed its stance on the firm. Insight Enterprises, Inc. is a Tempe, Arizona-based business-to-business company with a $3.3 billion market capitalization. NSIT delivered a 27.56% return since the beginning of the year, extending its 12-month returns to 64.96%. The stock closed at $96.68 per share on August 24, 2021.
Here is what L1 Capital has to say about Insight Enterprises, Inc. in its Q2 2021 investor letter:
“Insight Enterprises, a previous top-ten holding, was divested in full during the quarter. In conjunction with inline Q1 2021 results, Insight announced the intention for CEO, Ken Lamneck to retire by the end of this year. A new CEO has not yet been announced. Ken Lamneck has been CEO of Insight for over 11 years and is currently 65 years old, so his retirement was not a shock. However, we do consider Lamneck to have been central to shareholder value creation, including through successful acquisitions. A period of uncertainty while leadership is transitioned to an unknown new CEO, as well as share price appreciation led us to conclude more attractive risk adjusted opportunities lay elsewhere in our Portfolio and Bench of potential investments.”
Based on our calculations, Insight Enterprises, Inc. (NASDAQ: NSIT) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. NSIT was in 19 hedge fund portfolios at the end of the first half of 2021, compared to 17 funds in the previous quarter. Insight Enterprises, Inc. (NASDAQ: NSIT) delivered a -6.93% 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.
