Pershing Square Holdings, Ltd., an investment management firm, published its second-quarter 2021 investor letter – a copy of which can be downloaded here. For the first half of 2021 and year-to-date through August 17, 2021, the Company’s NAV per share, including dividends, increased by 7.3% and 5.8%, respectively, and the Company’s share price increased by 4.7% and 2.0%, respectively, compared with the S&P 500 which returned 15.2% and 19.5% over the same period. 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 Pershing Square Holdings, the fund mentioned Agilent Technologies, Inc. (NYSE: A) and discussed its stance on the firm. Agilent Technologies, Inc. is a Santa Clara, California-based analytical laboratory instrument manufacturing company with a $48.7 billion market capitalization. Agilent delivered a 36.07% return since the beginning of the year, while its 12-month returns are up by 59.73%. The stock closed at $159.90 per share on September 28, 2021.
Here is what Pershing Square Holdings has to say about Agilent Technologies, Inc. in its Q2 2021 investor letter:
“Our large commitment to UMG required that we raise cash from the sale of one of our other investments. In light of the high quality of companies in our portfolio, this was a diffi cult decision to make. Ultimately, we chose to sell Agilent, as its current share price approached our conservative estimate of intrinsic value. If we did not need the capital, we would not have sold the stock.
Agilent has been a highly successful investment since our original purchase nearly two years ago, compounded by our additional investment in the company in the Covid market decline last year. Agilent’s stock price has increased 2.2 times since our initial purchase as a result of the company’s acceleration in revenue growth and profi tability.10 Agilent has been a critical supplier of technology and services to labs around the world fi ghting the Covid pandemic. The company’s management team led by Mike McMullen deserves enormous credit for the company’s success and for its important contribution to science and the fi ght against Covid for which we all should be extremely grateful.”
Based on our calculations, Agilent Technologies, Inc. (NYSE: A) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. Agilent was in 39 hedge fund portfolios at the end of the first half of 2021, compared to 42 funds in the previous quarter. Agilent Technologies, Inc. (NYSE: A) delivered an 8.93% 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.
