Smead Capital Management, an investment management firm, published its “Smead Value Fund” second quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly portfolio net return of 8.97% was recorded by the fund for the second quarter of 2021, compared to an 8.55% return of the S&P 500 Index and a gain of 5.21% of the Russell 1000 Value Index. You can view the fund’s top 5 holdings to have an idea about their top bets for 2021.
In the Q2 2021 investor letter of Smead Capital, the fund mentioned AMERCO (NASDAQ: UHAL) and discussed its stance on the firm. AMERCO is a Reno, Nevada-based holding company, that currently has a $12.8 billion market capitalization. UHAL delivered a 44.95% return since the beginning of the year, extending its 12-month returns to 87.62%. The stock closed at $660.39 per share on August 12, 2021.
Here is what Smead Capital has to say about AMERCO in its Q2 2021 investor letter:
“AMERCO (UHAL) backed off from terrific 12-month performance. Let them know if you’d like to rent a vehicle to go to Los Angeles from Phoenix. It only costs $189 to go to LA, but it cost $1,200 to rent the same vehicle in LA and drive it to Phoenix. These results can be directly tied to holding shares which are heavily under-owned by most institutions and professionals. Many of our companies are under-followed or downright disrespected by the analysts which are paid to research them. We hope we are still in an era where stock picking can shine.”
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Based on our calculations, AMERCO (NASDAQ: UHAL) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. UHAL was in 23 hedge fund portfolios at the end of the first quarter of 2021, compared to 21 funds in the fourth quarter of 2020. AMERCO (NASDAQ: UHAL) delivered a 6.62% 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. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks 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.
