Artko Capital LP, an investment management firm, published its second-quarter 2021 investor letter – a copy of which can be downloaded here. A return of 0.5% was delivered by the fund for the second quarter of 2021, underperforming the S&P 500 Index, the Russell 2000, and Russell Microcap Index, which delivered an 8.6%, 4.3%, and 4.1% return respectively for the same period. You can take a look at the fund’s top 5 holdings to have an idea about their top bets for 2021.
In the Q2 2021 investor letter of Artko Capital, the fund mentioned The Joint Corp. (NASDAQ: JYNT) and discussed its stance on the firm. The Joint Corp. is a Scottsdale, Arizona-based chiropractic clinic franchisor with a $1.5 billion market capitalization. JYNT delivered a 303.18% return since the beginning of the year, while its 12-month returns are up by 538.95%. The stock closed at $102.26 per share on September 22, 2021.
Here is what Artko Capital has to say about The Joint Corp. in its Q2 2021 investor letter:
“Two poignant examples in recent years have been our investments, one is in Joint Chiropractic (JYNT). Both of the investments have worked out fantastically for our partners with 300% plus return for each, however, our experience and our risk process where we take off at least 5% of portfolio gains when a position reaches 15% of the portfolio has limited our potential, as has limiting our vision for potential gains in 100s of percent instead of a 1000+ (as been the case with JYNT). Additionally, following this risk management model has resulted in some minor tax inefficiencies for the partnership. “
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Based on our calculations, The Joint Corp. (NASDAQ: JYNT) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. JYNT was in 22 hedge fund portfolios at the end of the first half of 2021, compared to 21 funds in the previous quarter. The Joint Corp. (NASDAQ: JYNT) delivered a 28.44% 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.
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Disclosure: None. This article is originally published at Insider Monkey.
