Madison Funds, an independent investment management firm, published its fourth quarter 2020 “Madison Mid Cap Fund” investor letter – a copy of which can be downloaded here. A return of 15.54% was recorded by the fund’s Class Y shares in the fourth quarter of 2020, below its Russell Midcap benchmark that delivered a 19.91% return in the same period. You can view the complete list of the fund’s Average Annual Total Returns and its top 5 holdings to have a peek at their top bets for 2021.
Madison Mid Cap Fund, in their Q4 2020 investor letter, mentioned Clarivate Plc (NYSE: CLVT) and emphasized their views on the company. Clarivate Plc is a Philadelphia, Pennsylvania-based insights and analytics provider that currently has a $15.1 billion market capitalization. Since the beginning of the year, CLVT delivered a -16.39% return, while its 12-month gains are still up by 21.82%. As of March 26, 2021, the stock closed at $24.84 per share.
Here is what Madison Mid Cap Fund has to say about Clarivate Plc in their Q4 2020 investor letter:
“Clarivate is a leading provider of various data and analytics for scientific, pharmaceutical, and intellectual property markets, with several different subsidiaries assembled through acquisitions. Among university academics, its Web of Science product is a household name as a deep and broad database covering academic studies published dating back to the 19th century. It’s the de facto standard of reference for a scientist or student looking for what’s been published in the past. Clarivate’s Derwent unit is similar to Web of Science, but for patent filings. Its database contains 98% of all patents filed globally, and is the reference standard used by law firms, corporations, and governments to research patents. Its most recent acquisition, CPA Global, is a leading provider of software that helps companies and law firms manage and process their portfolio of patents and trademarks.
Clarivate’s products are very sticky with high margins. Over 80% of its revenues are in subscription form, and the relatively mission critical nature of its products gives it very high customer retention and good pricing power. As you might imagine, the shares in such a company do not come cheap. However, we believe it’s cheaper than it looks. It has good organic growth potential, but also can continue to be a platform for further acquisitions. The ace in the hole here is Chairman and CEO Jerre Stead. If that name sounds familiar, that’s because it should. Stead was the entrepreneur and executive who built IHS into the information services powerhouse company that we invested in some years ago. He retired soon after selling IHS to Markit in 2016, but it turns out he didn’t really retire. He decided to take what he learned at IHS and apply it to a new set of information service businesses. Clarivate is the result. As investors in IHS, we benefitted from the success of Jerre 2.0, when he returned from his first retirement with renewed energy when his successor didn’t pan out. With Clarivate, we have Jerre version 3.0, and we hope that it’s another upgrade once again.”
Pixabay/Public Domain
Our calculations show that Clarivate Plc (NYSE: CLVT) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Clarivate Plc was in 40 hedge fund portfolios, compared to 37 funds in the third quarter. CLVT delivered a -17.45% return in the past 3 months.
The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website:
Disclosure: None. This article is originally published at Insider Monkey.