Wedgewood Partners, an investment management firm, published its second-quarter 2022 investor letter – a copy of which can be downloaded here. For the first half of 2022, a portfolio net return of -17.2% was recorded by the fund, underperforming the S&P 500 Index which delivered a -16.1% return for the same period. Go over the fund’s top 5 positions to have a glimpse of its finest picks for 2022.
In its Q2 2022 investor letter, Wedgewood Partners mentioned Starbucks Corporation (NASDAQ:SBUX) and explained its insights for the company. Founded in 1971, Starbucks Corporation (NASDAQ:SBUX) is a Seattle, Washington-based coffeehouse company with a $95.1 billion market capitalization. Starbucks Corporation (NASDAQ:SBUX) delivered a -29.08% return since the beginning of the year, while its 12-month returns are down by -32.23%. The stock closed at $82.96 per share on July 27, 2022.
Here is what Wedgewood Partners has to say about Starbucks Corporation (NASDAQ:SBUX) in its Q2 2022 investor letter:
“We exited our position in Starbucks during the second quarter. We do not mind admitting that there was a heated internal debate over this position, as there were several conflicting issues to weigh in our decision. Before the pandemic, we had been quite happy with the Company’s execution and the stock’s performance, and we were likewise happy with strategic decisions made during and immediately after the initial pandemic-related lockdowns in 2020, as we have written previously.
Despite our appreciation for the Company’s execution during this period, it was dealing with some concerning issues. First, as a business reliant upon stores being open, the Company faced continuing risks from rolling pandemic-related lockdowns, particularly in China, which is the Company’s second largest and fastest-growing market. A second and related issue was employee illness; even as stores were open, various pandemic waves (Omicron, for example) caused many employees to miss shifts, making it very difficult and expensive for Starbucks to keep its stores staffed properly.
The Company’s stock, like most of the U.S. stock market, enjoyed a healthy recovery from the pandemic beginning near the end of 2020 and into 2021; at times, we believed that recoveries in many portions of the stock market happened well ahead of recoveries in fundamentals, or that individual stocks often didn’t reflect still existing pandemic-related risks. Starbucks fit into this category for us at one point, and we would remind our investors that we earlier reduced our position in the stock for exactly that reason…” (Click here to see the full text)
Photo by Karlo Tottoc on Unsplash
Our calculations show that Starbucks Corporation (NASDAQ:SBUX) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Starbucks Corporation (NASDAQ:SBUX) was in 58 hedge fund portfolios at the end of the second quarter of 2022, compared to 53 funds in the previous quarter. Starbucks Corporation (NASDAQ:SBUX) delivered a 11.00% return in the past 3 months.
In June 2022, we also shared another hedge fund’s views on Starbucks Corporation (NASDAQ:SBUX) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q2 page.
Disclosure: None. This article is originally published at Insider Monkey.
