Longleaf Partners Fund, a Memphis-based fund under Southeastern Asset Management, published its “Longleaf Partners Fund” third quarter 2021 investor letter – a copy of which can be downloaded here. Longleaf Partners Fund fell 5.70% in the third quarter, while the S&P 500 Index returned 0.58%. The Fund remains ahead of the index year-to-date (YTD), up 16.38% vs. the S&P’s 15.92%. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
Longleaf Partners Fund, in its Q3 2021 investor letter, mentioned MGM Resorts International (NYSE: MGM) and discussed its stance on the firm. MGM Resorts International is a Las Vegas, Nevada-based hospitality company with a $21.1 billion market capitalization. MGM delivered a 43.10% return since the beginning of the year, while its 12-month returns are up by 74.09%. The stock closed at $45.09 per share on November 12, 2021.
Here is what Longleaf Partners Fund has to say about MGM Resorts International in its Q3 2021 investor letter:
“MGM (1%, 0.09%), the casino and iGaming company, was a top contributor. With Vegas and regional casinos open, results in the quarter were strong and above 2019 cash flow levels at many properties. Revenues remain around 70% of 2019 levels and should reach new highs when large conventions return in a year. BetMGM is now the #2 mobile app in its category nationally and has exceeded all our expectations. CEO Bill Hornbuckle also grew MGM’s value by selling the real estate of several casinos at great prices and repurchasing shares at a 7% annualized pace. His excellent work over the last two years pulled the company through lockdowns and positioned it to be stronger than ever in 2022 and the years to come.”
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Based on our calculations, MGM Resorts International (NYSE: MGM) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. MGM was in 59 hedge fund portfolios at the end of the first half of 2021, compared to 57 funds in the previous quarter. MGM Resorts International (NYSE: MGM) delivered an 11.58% 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.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. Recently we came across a high-growth stock that has tons of hidden assets and is trading at an extremely cheap valuation. We go through lists like the 10 best growth stocks to buy to pick the next Tesla that will deliver a 10x return. 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 homepage.
Disclosure: None. This article is originally published at Insider Monkey.
