Here’s Why Artisan Small Cap Discarded Lemonade Inc. (LMND)

Artisan Partners Limited Partnership, a high value-added investment management firm, published its ‘Artisan Small Cap Fund’ fourth quarter 2020 investor letter – a copy of which can be downloaded here. A return of 27.07% was recorded by its Investor Class: ARTSX, 27.14% by its Advisor Class: APDSX, and 27.15% by its Institutional Class: APHSX, in the fourth quarter of 2020, all below its Russell 2000 Growth Benchmark that delivered a 29.61% return and its Russel 2000 Index that was up by 31.37% in the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Artisan Small Cap Fund, in their Q4 2020 investor letter, mentioned Lemonade, Inc. (NYSE: LMND) and emphasized their views on the company. Lemonade, Inc. is a US-based insurance company that currently has a $5.9 billion market capitalization. Since the beginning of the year, LMND delivered a -7.06% return, deeply pulling its 12-month gains down to -21.43%. As of March 17, 2021, the stock closed at $104.77 per share.

Here is what Artisan Small Cap Fund has to say about Lemonade, Inc. in their Q4 2020 investor letter:

“We also exited our investment in Lemonade. Lemonade is a digital-first insurance provider, offering both domestic and international homeowners and renters insurance. The company is disrupting its industry, having digitized the entire insurance
experience—from client onboarding to claims—in order to build generational relationships with first-time insurance buyers. Using its app, the median time to receive a bindable renters insurance quote from Lemonade is less than two minutes, and the time for a homeowner’s quote is under three minutes. All claims are also filed through the Lemonade app, where a claims-specific bot can pay out applicable claims in as little as three seconds. The company’s longterm strategy is built upon acquiring customers cheaply today as they begin their adult life with the anticipation of growing future premiums as customer demands for insurance products naturally increase as they accumulate typically insured possessions—home and car purchases, travel, pets and providing coverage for beneficiaries in the event of an unforeseen death. We believe the addressable market is massive, particularly given the industry has largely resisted change, giving Lemonade a long runway to take share from weaker legacy competitors. That said, with shares appreciating above our PMV estimate, we exited our campaign.”

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Our calculations show that Lemonade, Inc. (NYSE: LMND) 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, Lemonade, Inc. was in 13 hedge fund portfolios, compared to 15 funds in the third quarter. LMND delivered a -33.70% 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.