VGI Partners Global Investments Limited, an investment management company, released its second quarter 2023 investor letter. A copy of the same can be downloaded here. The firm returned 19.7%1 at an average net exposure of 72% for the six months ended June 30, 2023. Since the start of 2023, global market indices have recovered, with the MSCI World Index increasing +14% to 30 June 2023, the S&P 500 rising +16%, and the technology-focused NASDAQ Composite increasing +32% for the same period. In addition, please check the fund’s top five holdings to know its best picks in 2023.
VGI Partners highlighted stocks like CME Group Inc. (NASDAQ:CME) in the second quarter 2023 investor letter. Headquartered in Chicago, Illinois, CME Group Inc. (NASDAQ:CME) operates contract markets for the trading of futures and options. On August 15, 2023, CME Group Inc. (NASDAQ:CME) stock closed at $205.17 per share. One-month return of CME Group Inc. (NASDAQ:CME) was 10.08%, and its shares lost 0.62% of their value over the last 52 weeks. CME Group Inc. (NASDAQ:CME) has a market capitalization of $73.803 billion.
VGI Partners made the following comment about CME Group Inc. (NASDAQ:CME) in its second quarter 2023 investor letter:
“CME Group Inc. (NASDAQ:CME) operates futures and derivatives exchanges, including the Chicago Mercantile Exchange, the New York Mercantile Exchange, the Chicago Board of Trade, and the Dow Jones Index Services. On top of this, CME also owns other key assets related to foreign exchange trading & infrastructure and a strategic shareholding in Standard & Poor’s (S&P) Index business.
The key driver of trading activity for CME is in its interest rate derivatives products, where it has an effective monopoly in the exchange trading of interest rate derivatives in the United States, through its benchmark products across the entirety of the interest rate curve. Demand for interest rate derivatives is driven by volatility in interest rate markets, whose effect is compounded by the number of bonds held by those looking to manage interest rate risk and, by extension, market liquidity. The below chart of average daily volumes of interest rate derivatives and US Federal debt held by the public illustrates the extremely strong relationship between the size of the US Treasury market and volumes growth, although there are deviations around this primarily around Fed intervention (for example, at the start of the pandemic, volumes were suppressed by an enormous amount of Quantitative Easing (QE) and effectively zero interest rates which reduced the demand for hedging products). We expect the growth in the size of the US Treasury market, particularly in relation to privately held US treasuries as the Fed undergoes a balance sheet unwind, to remain a powerful underpinning of CME’s interest rate derivatives business…” (Click here to read the full text)
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CME Group Inc. (NASDAQ:CME) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 55 hedge fund portfolios held CME Group Inc. (NASDAQ:CME) at the end of first quarter 2023 which was 58 in the previous quarter.
We discussed CME Group Inc. (NASDAQ:CME) in another article and shared Baron FinTech Fund’s views on the company. In addition, please check out our hedge fund investor letters Q2 2023 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
