Here’s Why Vulcan Value Partners Became Optimistic in Upstart (UPST)

Vulcan Value Partners, an investment management firm, published its “Large Cap, Small Cap, Focus Composite, Focus Plus Composite, and All Cap Composite” first quarter 2021 investor letter – a copy of which can be downloaded here. Vulcan’s Large Cap Composite Fund delivered a 7.1% net return for the first quarter of 2021, 20.4% for the Small Cap, 5.5% for both the Focus  Composite and Focus Plus Composite Fund,  and 8.7% return was delivered by its All Cap Composite Fund for the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Vulcan Value Partners, in its Q1 2021 investor letter, mentioned Upstart Holdings, Inc. (NASDAQ: UPST), and shared their insights on the company. Upstart Holdings, Inc. is a San Carlos, California-based consumer lending company that currently has an $11 billion market capitalization. Since the beginning of the year, UPST delivered a 252.37% return, while its its 1-month gains are up by 33.72%. As of May 21, 2021, the stock closed at $139.08 per share.

Here is what Vulcan Value Partners has to say about Upstart Holdings, Inc. in its Q1 2021 investor letter:

Upstart Holdings Inc. was another material contributor during the quarter. It is a cloud-based lending platform that uses artificial intelligence in its underwriting. Upstart generates positive earnings and robust free cash flow. The company reported strong results with increased fee revenue for the fourth quarter and for the year. We believe that the company’s unique product offering will continue to drive strong future growth. Despite the stock price appreciation during the quarter, we believe the stock continues to trade at a discount to our estimate of intrinsic value.”

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Our calculations show that Upstart Holdings, Inc. (NASDAQ: UPST) 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, Upstart Holdings, Inc. was in 15 hedge fund portfolios. UPST delivered an 60.02% 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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