Bireme Capital, an investment management firm, published its third-quarter 2021 investor letter – a copy of which can be seen here. Fundamental Value had its best year ever in 2021, returning 48.5% net of fees vs 28.7% for the S&P 500. The fund has now compounded at 25.9% net of fees since inception in June of 2016, beating the market by 800 bps annually over more than half a decade. While this level of absolute returns is unlikely to be sustainable, Bireme Capital is as confident as ever in its ability to significantly outperform a still richly-valued equity market. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
Bireme Capital, in its Q4 2021 investor letter, mentioned Affirm Holdings, Inc. (NASDAQ: AFRM) and discussed its stance on the firm. Founded in 2012, Affirm Holdings, Inc. is a San Francisco, California-based publicly traded financial technology company with an $8.7 billion market capitalization, and is currently spearheaded by its CEO, Max Levchin. AFRM delivered a -69.31% return since the beginning of the year, while its 12-month returns are down by -61.22%. The stock closed at $30.86 per share on March 11, 2022.
Here is what Bireme Capital has to say about Affirm Holdings, Inc. in its Q4 2021 investor letter:
“We opened a more idiosyncratic short position in a company called Affirm (AFRM) in Q4.
Affirm is a “Buy Now, Pay Later” (BNPL) company founded by former PayPal CTO and cofounder Max Levchin. They provide installment loans to consumers, partnering with retail companies looking to drive higher sales. They have two primary products: a zero-fee installment loan for consumers with the best credit scores, and a more traditional product with 20%+ interest rates for subprime borrowers. Their stated plan is to disrupt the credit industry with more transparent, lower-fee loans.
At a roughly $28b market cap at the start of 2022, AFRM stock was priced at more than 20x trailing sales, a steep price for a money-losing lender. While their early lead in online BNPL transactions and partnerships with fast-growing retailers like Peloton has fueled significant historical growth, a wave of competition has arrived.”
Our calculations show that Affirm Holdings, Inc. (NASDAQ: AFRM) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. AFRM was in 41 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 39 funds in the previous quarter. Affirm Holdings, Inc. (NASDAQ: AFRM) delivered a -73.09% return in the past 3 months.
In February 2022, we published an article that includes AFRM in the 5 Best Most Active Stocks To Buy Now. You can find more than 100 investor 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.
