Wasatch Global Investors, an investment management firm, published its “Wasatch Micro Cap Value Fund” second quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly return of 8.78% was recorded by the fund’s investor class for the Q2 of 2021, outperforming the benchmark, Russell Microcap® Index, which returned 4.14% 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 Wasatch Global Investors, the fund mentioned Kaleyra, Inc. (NYSE: KLR) and discussed its stance on the firm. Kaleyra, Inc. is a New York, New York-based communication software solutions developer with a $441.1 million market capitalization. KLR delivered an 8.32% return since the beginning of the year, while its 12-month returns are up by 41.46%. The stock closed at $10.68 per share on September 17, 2021.
Here is what Wasatch Global Investors has to say about Kaleyra, Inc. in its Q2 2021 investor letter:
“One example of our recent IT purchases is Kaleyra, Inc. (KLR), an Italian company that develops software for communications and e-commerce security. The company offers a cloudbased platform for creating text- and voicemessaging applications. We initially bought Kaleyra as a special-purpose acquisition company (SPAC), but it’s now an operating company with a stock that’s publicly traded on the New York Stock Exchange. Most people seem to appreciate text messages that are used to confirm critical meetings and package deliveries. These are the types of messages that are enabled by Kaleyra’s software. The company operates mostly in Italy and India, where we think there’s enormous headroom for growth. Moreover, based on our metrics, Kaleyra’s valuation is less than half the valuation of other well-positioned companies in the same business. Although Italy and India have faced significant challenges with Covid-19, we think growth coming after the pandemic will be especially strong.”
Based on our calculations, Kaleyra, Inc. (NYSE: KLR) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. KLR was in 31 hedge fund portfolios at the end of the first half of 2021, compared to 18 funds in the previous quarter. Kaleyra, Inc. (NYSE: KLR) delivered a -9.26% 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.
