Weitz Investment Management, an investment management firm, published its “Hickory Fund” second quarter 2021 investor letter – a copy of which can be downloaded here. A return of +5.26% was recorded by the fund in the second quarter of 2021, underperforming its Russell Midcap benchmark that delivered a +7.50% return. 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 Weitz Investment Management, the fund mentioned Dun & Bradstreet Holdings, Inc. (NYSE: DNB) and discussed its stance on the firm. Dun & Bradstreet Holdings, Inc. is a Short Hills, New Jersey-based business decisioning data and analytics provider with a $7.6 billion market capitalization. DNB delivered a -28.84% return since the beginning of the year, while its 12-month returns are down by -29.82%. The stock closed at $17.83 per share on September 10, 2021.
Here is what Weitz Investment Management has to say about Dun & Bradstreet Holdings, Inc. in its Q2 2021 investor letter:
“Our two portfolio additions in the quarter, (which includes) Dun & Bradstreet, are strong examples of our QuaD approach in action. Dun & Bradstreet collects and provides proprietary data used by businesses to understand the credit risk of their counterparties, a service somewhat analogous to the more familiar credit scores for consumers. Prior management rested upon the laurels of this essential service, and necessary reinvestment was neglected until the business was ultimately sold in 2019. Under new management, led by Chairman Bill Foley and CEO Anthony Jabbour, Dun & Bradstreet has moved quickly to modernize its technology, improve its sales and contracting practices, invest in new data and capabilities that enhance its value to customers, and evaluate potential acquisitions that can boost each of these efforts. Our positive experience with Black Knight (Foley and Jabbour are Chairman Emeritus and CEO, respectively) bolsters our confidence in the efficacy of these efforts, despite the market adopting a “wait and see” approach.”
Based on our calculations, Dun & Bradstreet Holdings, Inc. (NYSE: DNB) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. DNB was in 45 hedge fund portfolios at the end of the first half of 2021, compared to 29 funds in the previous quarter. Dun & Bradstreet Holdings, Inc. (NYSE: DNB) delivered a -14.72% 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.