Madison Funds, an investment management firm, published its “Madison Mid Cap Fund” third-quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly portfolio return of -0.87% was recorded by the fund’s Class Y shares for the third quarter of 2021, with an 11.44% gain on a year-to-date basis, compared to the Russell Midcap® Index’s gains of -0.93%, for the third quarter and 15.17 % year-to-date (YTD). 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 Cannae Holdings, Inc. (NYSE: CNNE) and discussed its stance on the firm. Cannae Holdings, Inc. is a Las Vegas, Nevada-based diversified holding company with a $2.9 billion market capitalization. CNNE delivered a -26.20% return since the beginning of the year, while its 12-month returns are down by -16.02%. The stock closed at $32.67 per share on October 20, 2021.
Here is what Madison Funds has to say about Cannae Holdings, Inc. in its Q3 2021 investor letter:
“Our investment in Cannae was raised to a more typical position size. The underlying business continue to perform well and as we’ve gotten to know the management teams better over the past year, our confidence in their companies’ futures have increased, even as the market continues to undervalue both stocks. Cannae shares trade a large discount to its net asset value as computed using the market prices of its holdings.”
Based on our calculations, Cannae Holdings, Inc. (NYSE: CNNE) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. CNNE was in 34 hedge fund portfolios at the end of the first half of 2021, compared to 36 funds in the previous quarter. Cannae Holdings, Inc. (NYSE: CNNE) delivered a 3.85% 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.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest-growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 12 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage.
Disclosure: None. This article is originally published at Insider Monkey.
