Is Nutanix (NTNX) A Smart Long-Term Buy?

Andaz Private Investments, an investment management firm, published its second quarter 2021 investor letter – a copy of which can be downloaded here. For the 12-month period to the 30th of June 2021, the fund generated an investment return of +45.4% before fees, expenses, and taxes. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Andaz Private Investments, in its Q2 2021 investor letter, mentioned Nutanix, Inc. (NASDAQ: NTNX), and shared their insights on the company. Nutanix, Inc. is a San Jose, California-based computer software company that currently has an $8.1 billion market capitalization. Since the beginning of the year, NTNX delivered a 20.55% return, extending its 12-month gains to 60.96%. As of July 02, 2021, the stock closed at $38.42 per share.

Here is what Andaz Private Investments has to say about Nutanix, Inc. in its Q2 2021 investor letter:

“We increased Nutanix (NTNX) from a c.11% weight to the maximum 15% weight purchasing at $27.46 and $26.72 on May 5 and 6 respectively… We invested into several tech situations which were discarded by the market in May on inflation concerns.”

IT Support Specialist, software


Our calculations show that Nutanix, Inc. (NASDAQ: NTNX) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the first quarter of 2021, Nutanix, Inc. was in 29 hedge fund portfolios, compared to 24 funds in the fourth quarter of 2020. NTNX delivered a 41.15% 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.