Bonsai Partners recently released its Q4 2020 Investor Letter, a copy of which you can download here. The fund posted a return of 247% for the quarter (net of fees), outperforming their benchmark, the S&P 500 Index which returned 18.4% in the same quarter. You should check out Bonsai Partners’ top 5 stock picks for investors to buy right now, which could be the biggest winners of this year.
In the Q4 2020 Investor Letter, Bonsai Partners highlighted a few stocks and LKQ Corp (NASDAQ:LKQ) is one of them. LKQ Corp (NASDAQ:LKQ) is the largest supplier of used auto parts in the United States. In the last three months, LKQ Corp (NASDAQ:LKQ) stock gained 2.6% and on February 12th it had a closing price of $36.92. Here is what Bonsai Partners said:
“LKQ is the largest provider of alternative collision and mechanical automotive parts in the United States. In Europe, they are the leading distributor of general automotive maintenance parts and supplies. Its shares appreciated 27.1% during the quarter.
LKQ reported reasonably healthy third-quarter results, with revenues nearly flat year-over-year. This is quite remarkable considering ~9 months ago when we first considered buying LKQ, I didn’t know if the company would potentially trip its debt covenants and run into liquidity issues due to steep revenue declines. These issues appear well behind us now.
Given the serious tail-risk concerns when we first acquired the position, we cheaply hedged with put options; the only time we’ve ever done so. These options recently expired worthless and it never felt so good to lose money.
The company seems back on track to execute its strategy of streamlining its operations, and management used COVID as a catalyst to rationalize the business and improve service levels. Fortunately, LKQ’s business is counter-cyclical, so it stands to benefit from economic stresses if they are yet to come.”
In Q3 2020, the number of bullish hedge fund positions on LKQ Corp (NASDAQ:LKQ) stock increased by about 16% from the previous quarter (see the chart here), so a number of other hedge fund managers believe in LKQ’s growth potential. Our calculations showed that LKQ Corp (NASDAQ:LKQ) isn’t ranked among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
Video: Top 5 Stocks Among Hedge Funds
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website:
Disclosure: None. This article is originally published at Insider Monkey.