ClearBridge Investments: “Twitter (TWTR) Could be Considered an Improving Growth Story”

ClearBridge Investments, an investment management firm, published its “Multi Cap Growth Strategy” second quarter 2021 investor letter – a copy of which can be downloaded here. The ClearBridge Multi Cap Growth Strategy underperformed its Russell 3000 Growth Index benchmark in the second quarter. On an absolute basis, the Strategy generated gains across the seven sectors in which it was invested (out of 11 sectors total). The primary contributor to performance was the information technology (IT) sector. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

In the Q2 2021 investor letter of ClearBridge Investments, the fund mentioned Twitter, Inc. (NYSE: TWTR), and discussed its stance on the firm. Twitter, Inc. is a San Francisco, California-based social network company, that currently has a $53 billion market capitalization. TWTR delivered a 22.64% return since the beginning of the year, while its 12-month revenues are up by 85.45%. The stock closed at $66.41 per share on July 16, 2021.

Here is what ClearBridge Investments has to say about Twitter, Inc. in its Q2 2021 investor letter:

“Not every portfolio company will neatly fit into one of these four growth segments and some may move from one to another over time. Social media platform Twitter could be considered an improving growth story due to the initiatives put in place to grow and better monetize its user base. With the global return of live events and sports causing a rebound in advertising, combined with other new services beginning to thrive, this is a company with the fundamentals to be categorized as a disruptor.”


Photo by Claudio Schwarz on Unsplash

Based on our calculations, Twitter, Inc. (NYSE: TWTR) ranks 17th in our list of the 30 Most Popular Stocks Among Hedge Funds. Twitter, Inc. was in 107 hedge fund portfolios at the end of the first quarter of 2021, compared to 78 funds in the fourth quarter of 2020. NYSE delivered a -5.29% 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.