VGI Partners Global Investments Limited, an investment management company, released its 2022 annual investor letter. A copy of the same can be downloaded here. The firm returned -22.3% (net) for the year ended 31st December 2022. 2022 was a challenging year for the global equity market, the S&P 500 declined -19% during the period, the NASDAQ Composite retreated -33%, and the MSCI World Index fell -19% in the same period. In addition, please check the fund’s top five holdings to know its best picks in 2022.
VGI Partners highlighted stocks like CME Group Inc. (NASDAQ:CME) in its 2022 annual investor letter. Headquartered in Chicago, Illinois, CME Group Inc. (NASDAQ:CME) is a global contract market for the trading of futures and options. On March 31, 2023, CME Group Inc. (NASDAQ:CME) stock closed at $191.52 per share. One-month return of CME Group Inc. (NASDAQ:CME) was 3.58%, and its shares lost 18.36% of their value over the last 52 weeks. CME Group Inc. (NASDAQ:CME) has a market capitalization of $68.898 billion.
VGI Partners made the following comment about CME Group Inc. (NASDAQ:CME) in its 2022 annual investor letter:
“CME Group Inc. (NASDAQ:CME) is a business likely familiar to you, being one we have owned in our global strategy since 2008 and which was our largest VG1 position at the end of 2022.
CME operates futures and derivatives exchanges, including the Chicago Mercantile Exchange, the New York Mercantile Exchange, the Chicago Board of Trade, and the Dow Jones Index Services. On top of this, CME also owns other key assets related to foreign exchange trading & infrastructure and a strategic shareholding in Standard & Poor’s (S&P) Index business.
The key driver of trading activity for CME is in its interest rate derivatives products, where it has an effective monopoly in the exchange trading of interest rate derivatives in the United States, with benchmark products across the entirety of the interest rate curve. Demand for interest rate derivatives is driven by volatility in interest rate markets, whose effect is compounded by the number of bonds held by those looking to manage interest rate risk and, by extension, market liquidity. The below chart of average daily volumes of interest rate derivatives and US Federal debt held by the public illustrates the extremely strong relationship the size of the US Treasury market and volumes growth, although there are deviations around this primarily around Fed intervention (for example, at the start of the pandemic, volumes were suppressed by an enormous amount of Quantitative Easing (QE) and effectively zero interest rates which reduced the demand for hedging products). We expect the growth in the size of the US Treasury market, particularly in relation to privately held US treasuries as the Fed undergoes a balance sheet unwind, to remain a powerful underpinning of CME’s interest rate derivatives business…” (Click here to read the full text)
Photo by Javier Esteban on Unsplash
CME Group Inc. (NASDAQ:CME) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 58 hedge fund portfolios held CME Group Inc. (NASDAQ:CME) at the end of the fourth quarter which was 60 in the previous quarter.
We discussed CME Group Inc. (NASDAQ:CME) in another article and shared the list of best cryptocurrency stocks to buy according to hedge funds. In addition, please check out our hedge fund investor letters Q4 2022 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
