ClearBridge Investments, an investment management firm, published its “Select Strategy” second quarter 2021 investor letter – a copy of which can be downloaded here. The Strategy outperformed in a second-quarter rotation into growth stocks, fueled by a comeback in the higher growth disruptors we have owned for a number of years. 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 ClearBridge Investments, the fund mentioned Paymentus Holdings, Inc. (NYSE: PAY) and discussed its stance on the firm. Paymentus Holdings, Inc. is a Redmond, Washington-based cloud-based bill payment technology and solutions provider with a $2.9 billion market capitalization. PAY delivered a -10.76% return for the past month, and it closed at $24.35 per share on September 29, 2021.
Here is what ClearBridge Investments has to say about Paymentus Holdings, Inc. in its Q2 2021 investor letter:
“The new issue market remains an attractive source of new ideas and we participated in four IPOs in the latest period. Paymentus is a payment company using invoicing in more consumer-friendly channels. The company’s services allow a utility to send a customer a text message to connect a bank account and pay their bill. Paymentus is expanding its streamlined payment process to SMBs like gardeners and local merchants.”
Based on our calculations, Paymentus Holdings, Inc. (NYSE: PAY) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. PAY was in 12 hedge fund portfolios at the end of the first half of 2021. Paymentus Holdings, Inc. (NYSE: PAY) delivered a -31.39% 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.
