Polen Capital, an investment management firm, published its “Polen International Growth” second quarter 2021 investor letter – a copy of which can be downloaded here. A return of 5.57% was delivered by the fund for the Q2 of 2021, outperforming its MSCI All Country World benchmark that delivered a 5.47% return for the same period. You can take a look at the fund’s top 5 holdings to have an idea about their top bets for 2021.
In the Q2 2021 investor letter of Polen Capital, the fund mentioned Adidas AG (NYSE: ADDYY) and discussed its stance on the firm. Adidas AG is a Herzogenaurach, Germany-based athletic shoes, apparel, and sporting goods manufacturer with a $69.9 billion market capitalization. ADDYY delivered a -1.63% return since the beginning of the year, while its 12-month returns are up by 18.98%. The stock closed at $180.64 per share on August 25, 2021.
Here is what Polen Capital has to say about Adidas AG in its Q2 2021 investor letter:
“During the second quarter, the leading absolute contributors to performance (includes) Adidas. Shares of Adidas, the German athletic footwear and apparel maker, outperformed in the quarter as the company’s recently announced “Own the Game” strategy rolled out globally. This plan will leverage Adidas’ digitalization capabilities and innovation. In last quarter’s commentary, we discussed the potential impact increasing digitalization and customer connectivity can have on Adidas in the coming years. On product innovation, a robust product pipeline has helped drive strong growth across categories. Management optimism about the pipeline is a sign that recent trends could continue. Innovation runs the gamut from sustainable or recyclable materials
to high performance footwear. A steady stream of new product launches, called activations, evenly spaced out across a calendar year has drawn digitally connected consumers to check in and stay abreast of the latest developments. This connectivity is further supported by steady spending on marketing and endorsements. Together, these drivers delivered strong brand momentum across the business as sales grew.Margins have nearly fully recovered to pre-pandemic levels, and nearterm results indicate to us that Adidas is continuing to recover from the pandemic impact a year ago. We remain focused on the next five years and applaud management for navigating a tough environment while simultaneously putting a strategy in place for 2025. We believe Adidas could grow earnings at a high teens rate from 2021-2025 after normalizing from the extremes of COVID-19.”
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Based on our calculations, Adidas AG (NYSE: ADDYY) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. Adidas AG (NYSE: ADDYY) delivered a -1.12% 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.
