Evermore Global Advisors, an investment management firm, published its “Evermore Global Value Fund” second-quarter 2021 investor letter – a copy of which can be downloaded here. Institutional Class shares of the Evermore Global Value Fund (“EVGIX” or the “Fund”) were down 0.14% for the quarter ended June 30, 2021. The Fund ended the quarter with $264.8 million in net assets and 37 issuer positions. As of quarter-end, 68.4% of the Fund’s net assets were in micro-and small-capitalization (up to $2 billion) companies; 11.7% were in mid-capitalization (between $2 billion and $10 billion) companies, and 16.6% were in large-capitalization (> $10 billion) companies 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 Evermore Global Advisors, the fund mentioned ZIM Integrated Shipping Services Ltd. (NYSE: ZIM) and discussed its stance on the firm. ZIM Integrated Shipping Services Ltd. is a Haifa, Israel-based shipping company with a $6.4 billion market capitalization. ZIM delivered a 13.45% return for the past month, and it closed at $56.70 per share on September 24, 2021.
Here is what Evermore Global Advisors has to say about ZIM Integrated Shipping Services Ltd. in its Q2 2021 investor letter:
“ZIM Integrated Shipping Services (ZIM) was the largest contributor to the Fund’s performance during the second quarter. With a market cap of $5.2 billion, ZIM is an Israel-based containership operator that had its initial public offering on the New York Stock Exchange this past January. As a reminder, we discussed ZIM at length in the Q1 2021 quarterly commentary as one of the new investments that we initiated during that period.
There were several notable developments during the second quarter. Given the company’s unique asset light business model and targeted, global niche approach, ZIM continued to generate exceptionally strong cash flows. ZIM ended the period with approximately $1.25 billion in cash and about $915 million in net debt. Due to the strong operational performance, the company further strengthened its balance sheet by redeeming its Series 1 and Series 2 unsecured notes due in 2023. With the early redemption of the unsecured notes, ZIM was no longer subject to certain dividend restrictions, and it declared a special dividend of $2 per share, which will be payable on Sept 15th (goes ex on August 24th). Lastly, management revised its 2021 fullyear EBITDA guidance from $1.4 – 1.6 billion to $2.5 – $2.7 billion, which was a sizeable increase compared to the levels set last March. To that end, we continue to have high conviction in our position in ZIM.”
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Based on our calculations, ZIM Integrated Shipping Services Ltd. (NYSE: ZIM) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. ZIM was in 25 hedge fund portfolios at the end of the first half of 2021, compared to 14 funds in the previous quarter. ZIM Integrated Shipping Services Ltd. (NYSE: ZIM) delivered a 22.84% 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.