First Pacific Advisors, LLC, an investment management firm, published its “FPA U.S. Core Equity Fund” third-quarter 2021 investor letter – a copy of which can be downloaded here. In the third quarter, the FPA U.S. Core Equity Fund, Inc.’s (“Fund”) performance was -0.13% (0.14% before fees and expenses) compared to the 0.58% total return of the S&P 500 Index (“Index” or “S&P 500”), the Fund’s benchmark. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
FPA U.S. Core Equity Fund, in its Q3 2021 investor letter, mentioned Adidas AG (NYSE: ADDYY) and discussed its stance on the firm. adidas AG is a Herzogenaurach, Germany-based manufacturing company with a $55.5 billion market capitalization. ADDYY delivered a -21.94% return since the beginning of the year, while its 12-month returns are down by -20.45%. The stock closed at $142.27 per share on December 24, 2021.
Here is what FPA U.S. Core Equity Fund has to say about Adidas AG in its Q3 2021 investor letter:
“One of the largest detractors this quarter was Adidas, whose share price declined 13.4% in local currency (EUR) during this period. Both Nike’s and Adidas’ businesses have been impacted by the Covid-19 pandemic and related supply chain disruptions. Adidas is one of the few large-capitalization, high-quality, globally recognized brand businesses (founded in 1949) I am aware of in which the Covid-19 pandemic has structurally improved its long-term profitability and growth, but has a stock price (in local currency) that (as of 9/30/21) is approximately 6% below where it ended 2019. This is in part due to its revenue being down from 2019 to the trailing 12 months ending 6/30/21 by approximately 5% (in local currency). Compare that to Nike whose stock price is up about 43% from that same point in part due to revenue increasing 13.9% in FY21 vs FY19.
The Covid-19 pandemic has improved the structural profitability of Adidas’ business for two main reasons. First, the acceleration in its business mix toward the higher margin direct-to-consumer (DTC) channel. Second, the greater free time people have working increasingly from home has resulted in people playing more sports such as tennis, golf, running and general fitness training. In a post pandemic world, where many corporate offices are implementing a hybrid work model, we believe this trend toward more active lifestyles will continue. We think this bodes well for Adidas as well as other sports/active apparel companies such as Nike and Lululemon, which are portfolio holdings as well…” (Click here to see the full text)
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Based on our calculations, Adidas AG (NYSE: ADDYY) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. Adidas AG (NYSE: ADDYY) delivered a -16.23% return in the past 3 months.
Last month, we also shared another hedge fund’s views on ADDYY in another article. You can find more than 100 investor letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q3 page.
Disclosure: None. This article is originally published at Insider Monkey.
