ClearBridge Investments, an investment management firm, published its “Aggressive Growth Strategy” second quarter 2021 investor letter – a copy of which can be downloaded here. The ClearBridge Aggressive Growth Strategy underperformed its Russell 3000 Growth Index benchmark in the second quarter. On an absolute basis, the Strategy generated gains across the eight sectors in which it was invested (out of 11 sectors total), with the information technology (IT) and communication services sectors the primary contributors. 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 Match Group, Inc. (NASDAQ: MTCH), and discussed its stance on the firm. Match Group, Inc. is a Dallas, Texas-based online dating service company, that currently has a $44.5 billion market capitalization. MTCH delivered a 6.69% return since the beginning of the year, extending its 12-month revenues to 67.28%. The stock closed at $164.61 per share on July 13, 2021.
Here is what ClearBridge Investments has to say about Match Group, Inc. in its Q2 2021 investor letter:
“We initiated a position in Match Group in the quarter, the leading provider of dating products globally with 50%+ share of global online dating users. While this increases our overweight to the communication services sector, it adds indirect exposure to the consumer and diversifies the portfolio at the subsector level with an interactive media and service company, versus our historical overweight within traditional media. We see Match as a disruptor in the large, relatively underpenetrated market for online dating (there are 620 million global singles between 18 and 65, excluding China, versus the company’s 10 million paying subscribers today), and believe the company is well-positioned to benefit from a post-COVID-19 return to normalcy. We are also attracted to Match’s strong profitability profile and high degree of visibility given a large portion of revenue is subscription based.”
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Based on our calculations, Match Group, Inc. (NASDAQ: MTCH) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. Match Group, Inc. was in 68 hedge fund portfolios at the end of the first quarter of 2021, compared to 72 funds in the fourth quarter of 2020. MTCH delivered an 11.66% 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.
