L1 Capital, an investment management firm, published its ‘L1 Long Short Fund Limited’ fourth quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly net return of -1.7% was recorded by the fund for the fourth quarter of 2021, underperforming its S&P ASX 200 AI benchmark by -3.8%. The benchmark meanwhile had a 2.1% gain for the same period. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
L1 Capital Long Short Fund Limited, in its Q4 2021 investor letter, mentioned Peloton Interactive, Inc. (NASDAQ: PTON) and discussed its stance on the firm. Peloton Interactive, Inc. is a New York, New York-based exercise equipment company with a $12.4 billion market capitalization. PTON delivered a -3.02% return since the beginning of the year, while its 12-month returns are down by -77.58%. The stock closed at $37.46 per share on February 11, 2022.
Here is what L1 Capital Long Short Fund Limited has to say about Peloton Interactive, Inc. in its Q4 2021 investor letter:
“Peloton (Short -59%) shares collapsed in November after announcing a large reduction in its June FY22 revenue guidance as part of its first quarter trading update. This was the second consecutive downgrade after the company’s below-consensus update with its FY21 results. Peloton is a connected exercise equipment manufacturer with a cult following in the U.S. The company has been a significant COVID-19 beneficiary with stay-at-home orders dramatically increasing the demand for at-home exercise bikes. We began shorting the company in August 2021 (before the above-mentioned downgrades), when it was trading at ~US$110-120. Our view was that the U.S. was poised to reopen and interest in at-home fitness was diminishing. We saw competitors aggressively enter the market with new offerings at the same time as Peloton’s new treadmill product was marred by significant product issues. We also thought Peloton’s aggressive revenue recognition policies would exacerbate a potential demand slowdown, with small changes in subscriptions having a large impact on upfront revenue and profit generation. The softer demand outlook played out as we expected and the stock price collapsed, which enabled us to cover our short around US$52 per share.”
Courtesy of Peloton
Our calculations show that Peloton Interactive, Inc. (NASDAQ: PTON) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. PTON was in 62 hedge fund portfolios at the end of the third quarter of 2021, compared to 67 funds in the previous quarter. Peloton Interactive, Inc. (NASDAQ: PTON) delivered a -29.54% return in the past 3 months.
In September 2021, we also shared another hedge fund’s views on PTON in another article. You can find other letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.
Disclosure: None. This article is originally published at Insider Monkey.
