ClearBridge Investments, an investment management company, released its “ClearBridge Select Strategy” second quarter 2022 investor letter. A copy of this letter can be downloaded here. In the second quarter, the fund underperformed its benchmark index. Stocks from IT, healthcare, industrials, and consumer discretionary posted losses during the quarter, however stocks from consumer staples and financials sectors contributed to the performance of the fund. To know about the fund’s best picks in 2022, please check its top 5 holdings.
In the letter, ClearBridge Investments discussed its Select Strategy portfolio. The firm holds stocks like Pioneer Natural Resources Company (NYSE:PXD). Pioneer Natural Resources Company (NYSE:PXD) is an oil and gas company based in the US and has a market capitalization of $53.396 billion. The stock of Pioneer Natural Resources Company (NYSE:PXD) closed at $220.68 per share on August 3, 2022. One-month return of Pioneer Natural Resources Company (NYSE:PXD) was 1.85% and its shares gained 45.39% of their value over the last 52 weeks.
Here is what ClearBridge Select Strategy specifically said about Pioneer Natural Resources Company (NYSE:PXD) in its second-quarter investor letter:
“Energy has proved a recent source of new ideas. Here we target evolving opportunities, companies with specific drivers toward operating improvement trading at depressed valuations. Pioneer Natural Resources Company (NYSE:PXD) fit that narrative in 2020 when we made the oil exploration & production company a core holding. Intra-quarter, it grew into the largest holding in the Strategy. We subsequently trimmed Pioneer to reduce our direct oil exposure and rotated into natural gas with new positions in leading producer Chesapeake Energy (CHK) and drilling, services and technology supplier Baker Hughes (BKR). Energy remains one of the tighter commodity markets on the supply side and is experiencing a sea change from taking Russia out of the market. Europe will become more reliant on U.S. natural gas, which can be sold more profitably there than domestically.”
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Pioneer Natural Resources Company (NYSE:PXD) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 54 hedge fund portfolios held Pioneer Natural Resources Company (NYSE:PXD) at the end of the first quarter which was up from 43 in the previous quarter.
We discussed Pioneer Natural Resources Company (NYSE:PXD) in another article which shared Jim Cramer’s stock picks in recession. In addition, please check out our hedge fund investor letters Q2 2022 page for more investor letters from hedge funds and other leading investors.
Disclosure: None. This article is originally published at Insider Monkey.
In this piece, we will take a look at ten recent IPOs in micro cap stocks.
There are a variety of benefits and drawbacks to listing a firm’s equity for trading on the stock market. The single biggest benefit of the process called an IPO, is that it allows management to raise large amounts of funds and investors to potentially profit by seeing their existing stakes multiply in value. At the same time, the IPO process also brings in a variety of constraints. Publicly listed companies are subject to corporate financial reporting requirements of the jurisdictions in which their shares trade. At the same time, share prices can be a volatile affair, and while investors stand to gain significantly if their companies are well received by the market, they also risk equally massive losses should the opposite occur.
Warren Buffett never mentions this but he is one of the first hedge fund managers who unlocked the secrets of successful stock market investing. He launched his hedge fund in 1956 with $105,100 in seed capital. Back then they weren’t called hedge funds, they were called “partnerships”. Warren Buffett took 25% of all returns in excess of 6 percent.
For example S&P 500 Index returned 43.4% in 1958. If Warren Buffett’s hedge fund didn’t generate any outperformance (i.e. secretly invested like a closet index fund), Warren Buffett would have pocketed a quarter of the 37.4% excess return. That would have been 9.35% in hedge fund “fees”.
Actually Warren Buffett failed to beat the S&P 500 Index in 1958, returned only 40.9% and pocketed 8.7 percentage of it as “fees”. His investors didn’t mind that he underperformed the market in 1958 because he beat the market by a large margin in 1957. That year Buffett’s hedge fund returned 10.4% and Buffett took only 1.1 percentage points of that as “fees”. S&P 500 Index lost 10.8% in 1957, so Buffett’s investors actually thrilled to beat the market by 20.1 percentage points in 1957.
Between 1957 and 1966 Warren Buffett’s hedge fund returned 23.5% annually after deducting Warren Buffett’s 5.5 percentage point annual fees. S&P 500 Index generated an average annual compounded return of only 9.2% during the same 10-year period. An investor who invested $10,000 in Warren Buffett’s hedge fund at the beginning of 1957 saw his capital turn into $103,000 before fees and $64,100 after fees (this means Warren Buffett made more than $36,000 in fees from this investor).
As you can guess, Warren Buffett’s #1 wealth building strategy is to generate high returns in the 20% to 30% range.
We see several investors trying to strike it rich in options market by risking their entire savings. You can get rich by returning 20% per year and compounding that for several years. Warren Buffett has been investing and compounding for at least 65 years.
So, how did Warren Buffett manage to generate high returns and beat the market?
In a free sample issue of our monthly newsletter we analyzed Warren Buffett’s stock picks covering the 1999-2017 period and identified the best performing stocks in Warren Buffett’s portfolio. This is basically a recipe to generate better returns than Warren Buffett is achieving himself.
You can enter your email below to get our FREE report. In the same report you can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12-24 months. We initially share this idea in October 2018 and the stock already returned more than 150%. We still like this investment.
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