Cerence (CRNC)’s Q4 2020 Performance Reflected Positively in Alger Weatherbie’s Portfolio

Alger, an investment management firm, published its ‘Alger Weatherbie Specialized Growth Fund’ fourth quarter 2020 investor letter – a copy of which can be downloaded here. In the letter, the fund highlighted their largest portfolio sector weightings, which is in Information Technology and Health Care sector, with their comments on notable companies. The Financials sector together with the Health Care sector is where they achieved the largest chunk of their returns. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Alger Weatherbie Specialized Growth Fund, in their Q4 2020 investor letter, mentioned Cerence Inc. (NASDAQ: CRNC) and emphasized their views on the company. Cerence Inc. is a Massachusetts-based software company that currently has a $4.2 billion market capitalization. Since the beginning of the year, CRNC delivered an 11.71% return, massively extending its 12-month gains to 611.76%. As of March 15, 2021, the stock closed at $112.25 per share.

Here is what Alger Weatherbie Specialized Growth Fund has to say about Cerence Inc. in their Q4 2020 investor letter:

“Cerence Inc. provides voice recognition software to the auto industry. Cerence is strategically aligned with its original equipment manufacturer customers because the company seeks to provide a customized user experience and is well positioned with respect to the continued adoption of voice assistants powered by artificial intelligence (Al). Cerence’s software can be purchased piecemeal on a white label basis, allowing customers to buy the technology components they need to build their own branded, customized voice assistants. Developed through research and development plus mergers and acquisitions spanning over 20 years.

Cerence’s technology encompasses numerous elements, such as Al, natural language understanding, speech signal enhancement, and non-speech input capabilities, including gaze and gesture tracking. The Weatherbie team views Cerence as an Opportunity Growth stock, which had been held back by its approximately 100% auto industry exposure, an industry that was under severe but temporary pressure from Covid-19, as well as its financial leverage. During the quarter, the share price of
Cerence rebounded along with the overall auto industry, a result of encouraging vaccine developments. Significant growth in
bookings and the product pipeline also contributed to performance during the quarter.”

Our calculations show that Cerence Inc. (NASDAQ: CRNC) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Cerence Inc. was in 14 hedge fund portfolios, compared to 12 funds in the third quarter. CRNC delivered a 23.32% return in the past 3 months.

The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

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Disclosure: None. This article is originally published at Insider Monkey.