Artisan Partners, a high value-added investment management firm, published its ‘Artisan Mid Cap Fund’ second quarter 2021 investor letter – a copy of which can be downloaded here. A return of 10.45% was recorded by its Investor Class: ARTMX, 10.46% by its Advisor Class: APDMX, and 10.52% by its Institutional Class: APHMX, in the second quarter of 2021, all below the Russell Midcap® Growth Index that delivered an 11.07% return, but outperforming the Russell Midcap® Index that was up by 7.50% for 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 Artisan Partners, the fund mentioned LPL Financial Holdings Inc. (NASDAQ: LPLA) and discussed its stance on the firm. LPL Financial Holdings Inc. is a San Diego, California-based independent broker-dealer with an $11.9 billion market capitalization. LPLA delivered a 43.37% return since the beginning of the year, while its 12-month returns are up by 78.39%. The stock closed at $150.03 per share on September 2, 2021.
Here is what Artisan Partners has to say about LPL Financial Holdings Inc. in its Q2 2021 investor letter:
“We started new investment campaign in LPL Financial Holdings. LPL Financial is the largest independent broker-dealer in the US and the largest provider of outsourced wealth management services to banks. The company equips its over 17K financial advisors with the tools—research, technology, compliance, administrative support—to grow their businesses and help their retail clients with wealth management and financial planning. In recent years, a new leadership team has invested to improve advisor technology and remove friction within advisors’ workflows, driving a 50% increase in productivity while increasing advisor retention to ~98%. We believe LPL is well-positioned to capture further market share and benefit from a migration of advisors away from wire houses to the independent channel. In addition, we are optimistic that outsourcing contract wins with third party banks and traction in LPL’s new service offerings could further accelerate growth. Lastly, the company offers upside participation in a rising interest rate environment, as higher net interest yields would flow through at high incremental margins.”
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Based on our calculations, LPL Financial Holdings Inc. (NASDAQ: LPLA) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. LPLA was in 48 hedge fund portfolios at the end of the first half of 2021, compared to 38 funds in the previous quarter. LPL Financial Holdings Inc. (NASDAQ: LPLA) delivered a 6.03% 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.
