Madison Funds, an investment management firm, published its “Madison Dividend Income Fund” third-quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly portfolio return of +11.9% was recorded by the fund’s Class Y shares for the third quarter of 2021, compared to the S&P 500, Russell 1000 Value, and Lipper Equity Income Index gains of +15.9%, +16.1%, and +14.0% respectively for the same period. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
Madison Funds, in its Q3 2021 investor letter, mentioned Baker Hughes Company (NYSE: BKR) and discussed its stance on the firm. Baker Hughes Company is a Houston, Texas-based oil industry company with a $21.4 billion market capitalization. BKR delivered a 22.40% return since the beginning of the year, while its 12-month returns are up by 81.77%. The stock closed at $26.87 per share on October 19, 2021.
Here is what Madison Funds has to say about Baker Hughes Company in its Q3 2021 investor letter:
“BKR is a leading oilfield services provider that helps its customers with oil and gas exploration and production. Its customers include companies that discover oil, energy data management firms, drilling companies, well construction, and production and completion firms. The firm is also synonymous with the U.S. rig count. BKR also helps make energy cleaner and more efficient, and is a leader in energy transition businesses, including carbon capture and hydrogen, along with being a market leader in supplying equipment for liquified natural gas (LNG) projects….”
Oil Industry
Based on our calculations, Baker Hughes Company (NYSE: BKR) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. BKR was in 40 hedge fund portfolios at the end of the first half of 2021, compared to 42 funds in the previous quarter. Baker Hughes Company (NYSE: BKR) delivered a 27.19% 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.
