Harding Loevner, an investment management firm, published its “International Small Companies Equity Fund” first-quarter 2022 investor letter – a copy of which can be downloaded here. The International Small Companies composite declined 13.4% gross of fees in the first quarter, well beyond the 6.4% decline of the MSCI ACWI ex-US Small Cap Index. The portfolio’s concentration in expensive stocks, a hazard of our commitment to investing in the stocks of high-quality rapidly growing businesses, hurt relative performance in a quarter during which investors fled from richly priced companies. Try to spend some time taking a look at the fund’s top 5 holdings to be informed about their best picks for 2022.
In its Q1 2022 investor letter, Harding Loevner International Equity Fund mentioned Shell plc (NYSE:SHEL) and explained its insights for the company. Founded in 1907, Shell plc (NYSE:SHEL) is a London, United Kingdom-based multinational oil and gas company with a $196.3 billion market capitalization. Shell plc (NYSE:SHEL) delivered a 20.85% return since the beginning of the year, while its 12-month returns are up by 29.57%. The stock closed at $52.45 per share on June 21, 2022.
Here is what Harding Loevner International Equity Fund has to say about Shell plc (NYSE:SHEL) in its Q1 2022 investor letter:
“While risks of unforeseen consequences arising from the Ukraine conflict are high, on this front we are cautiously optimistic that China will work hard to maintain its neutrality in a credible way, as it is a huge beneficiary of trade with the rest of the world, especially the rich developed nations. We think it likely that China, along with India, will continue to buy oil and gas from Russia (just as Europe, at least for now, plans to keep its gas pipelines open), and do not expect that fact to alter China’s trade relations with the West much. Nevertheless, we must contemplate that our optimism is misplaced on the importance of membership in the global network of exchange. If our central and optimistic case—admittedly an educated guess—is wrong, then we’d need to greatly modify our views of which companies in our opportunity set will face new barriers to profitable growth, and which might stand to benefit, relatively, from a further receding of globalization. (Global trade, after all, has never matched the peak share of GDP it reached in 2008, before the Global Financial Crisis.) We’d expect such a world to be less efficient, as the cold logic of comparative advantage is demoted as a determinant of which goods or services are produced and where. That would lead to a less prosperous world, since exploiting comparative advantage is a cornerstone of wealth creation. If regional blocs began to raise limits on the movement of capital as well as goods, we’d need to parse which of our multi-national companies were at risk of declining sales from increasingly hostile, siloed countries. Royal Dutch Shell (NYSE:SHEL) has found its Siberian oil and gas joint venture assets stranded by the combination of sanctions and the public opprobrium of Russia’s actions.”
Our calculations show that Shell plc (NYSE:SHEL) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Shell plc (NYSE:SHEL) was in 37 hedge fund portfolios at the end of the first quarter of 2022, compared to 41 funds in the previous quarter. Shell plc (NYSE:SHEL) delivered a -1.85% return in the past 3 months.
In June 2022, we also shared another hedge fund’s views on Shell plc (NYSE:SHEL) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.
Disclosure: None. This article is originally published at Insider Monkey.