Wedgewood Partners, an investment management firm, published its third-quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly portfolio net return of +2.75% was recorded by the fund for the third quarter of 2021, outperforming the S&P 500 Index that delivered a +0.58% return for the same period, and the +1.16% gain of the Russell 1000 Growth Index. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
Wedgewood Partners, in its Q3 2021 investor letter, mentioned Motorola Solutions, Inc. (NYSE: MSI) and discussed its stance on the firm. Motorola Solutions, Inc. is a Chicago, Illinois-based data communication company with a $40.7 billion market capitalization. MSI delivered a 41.35% return since the beginning of the year, while its 12-month returns are up by 40.65%. The stock closed at $245.11 per share on October 14, 2021.
Here is what Wedgewood Partners has to say about Motorola Solutions, Inc. in its Q3 2021 investor letter:
“Motorola Solutions revenue grew over +20% as pent-up project spending returned at its public safety and corporate customers. Many of these state and local government customers will likely receive relief funding thanks to the federal American Rescue Plan Act of 2021. The public safety and communication budgets of the Company’s customers has proven to be very resilient in past economic downturns as emergency responders need Motorola’s mission critical networks to operate regardless of GDP growth. However, added state and local funding from the federal government should enable more budget flexibility which could accelerate network upgrade plans that utilize more high-margin software and services offered by Motorola.”
Based on our calculations, Motorola Solutions, Inc. (NYSE: MSI) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. MSI was in 37 hedge fund portfolios at the end of the first half of 2021, compared to 29 funds in the previous quarter. Motorola Solutions, Inc. (NYSE: MSI) delivered a 9.24% 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.
