Avory & Co, an investment management firm, published its fourth-quarter 2020 Investor Letter – a copy of which can be downloaded here. In the letter, the firm talked about the key themes they formulated for 2021 and the coming years, through automation, interactive entertainment, digital work, commerce evolution, financial revolution, and a lot more. You can view the fund’s top 10 holdings to have a peek at their top bets for 2021.
Avory & Co, in their Q4 2020 Investor Letter said that their projections for their top holding, Square, Inc. (NYSE: SQ), was met positively by the company amidst the pandemic and still continues to show great numbers. Square, Inc. is a financial services, and mobile payment business that currently has a $97.6 billion market cap. For the past 3 months, SQ delivered a decent 27.52% return and settled at $216.64 per share at the closing of January 25th.
Here is what Avory & Co has to say about Square, Inc. in their Investor Letter:
“At Avory, this principle was tested. Take Square for example, a top holding for years and one of our top holdings heading into the COVID crisis. The implications for Square seemed dire at first glance as physical retailers using the Square point of sale were unequivocally going to struggle. However, those who actively research the company knew that Square had a pristine balance sheet reinforced by a $1B capital raise on March 2nd. The point-of-sale market was still in the early innings of going from legacy to 21stcentury technology. This meant a quicker displacement of legacy with Square well positioned given its financial strength and diversified customer base. This was not the same circumstance for a competitor like Toast, which laid off 50% of its workforce in April. Square’s software and entrepreneurial driven culture allowed the company to create new products like curbside pickup, ignite Cash App usage through a well-designed Payroll Protection Program, and sign-up new customers that were in dire need of digitizing their stores with Square Online. This type of execution from Square is nothing new and somewhat predictable to long-standing researchers of the company.
Now, making assumptions on Square’s potential is one thing, but tracking it in real time provides the data required to create conviction. Despite a large segment of Square customers struggling, Square’s fundamentals were drastically improving.”
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Video: Top 5 Stocks Among Hedge Funds
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