Is it Still Safe to Invest in EPAM?

Harding Loevner, an investment management firm, published its “Emerging Markets Equity Fund” first-quarter 2022 investor letter – a copy of which can be downloaded here. Emerging Markets (EMS) declined 6.9% this quarter as measured by the MSCI EM Index, primarily due to the collapse in Russian equities and poor performance in China. As a result of the uncertainty around the war, European stocks with material businesses in, or trade linkages to, Russia or Ukraine sold off, as well as stocks in markets closest to the conflict. 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 Emerging Markets Equity Fund mentioned EPAM Systems, Inc. (NYSE:EPAM) and explained its insights for the company. Founded in 1993, EPAM Systems, Inc. (NYSE:EPAM) is a Newtown, Pennsylvania-based software engineering company with a $16.8 billion market capitalization. EPAM Systems, Inc. (NYSE:EPAM) delivered a -55.77% return since the beginning of the year, while its 12-month returns are down by -42.08%. The stock closed at $295.68 per share on June 17, 2022.

Here is what Harding Loevner Emerging Markets Equity Fund has to say about EPAM Systems, Inc. (NYSE:EPAM) in its Q1 2022 investor letter:

“The losses in Russia accounted for over 500 bps—roughly half—of our total underperformance. IT-services business EPAM (NYSE:EPAM)—developed-market-listed companies that have significant operations in Russia, Ukraine, and Belarus—together cost a further 200 bps in underperformance. By sector, the wipe out of our Russian and Russia-related holdings appeared as severe negative stock selection across IT (NYSE:EPAM).

We continue to hold  EPAM in IT. EPAM’s core advantage is its engineering capability that allows it to provide highly complex and valuable services to its customers. While recognizing that its business prospects are uncertain due to the displacement of many of its engineers by the conflict and potential client and staff defections, we believe it will be difficult for its clients to switch providers in the near term notwithstanding their preferences. EPAM should thus have time to adjust its geographic footprint.”


Photo by Danial Igdery on Unsplash

Our calculations show that EPAM Systems, Inc. (NYSE:EPAM) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. EPAM Systems, Inc. (NYSE:EPAM) was in 38 hedge fund portfolios at the end of the first quarter of 2022, compared to 38 funds in the previous quarter. EPAM Systems, Inc. (NYSE:EPAM) delivered a 0.41% return in the past 3 months.

In May 2022, we also shared another hedge fund’s views on EPAM Systems, Inc. (NYSE:EPAM) 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.