Is Zynga Inc. (ZNGA) A Smart Long-Term Buy?

Artisan Partners Limited Partnership, a high value-added investment management firm, published its ‘Artisan Small Cap Fund’ fourth quarter 2020 investor letter – a copy of which can be downloaded here. A return of 27.07% was recorded by its Investor Class: ARTSX, 27.14% by its Advisor Class: APDSX, and 27.15% by its Institutional Class: APHSX, in the fourth quarter of 2020, all below its Russell 2000 Growth Benchmark that delivered a 29.61% return and its Russel 2000 Index that was up by 31.37% in the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Artisan Small Cap Fund, in their Q4 2020 investor letter, mentioned Zynga Inc. (NASDAQ: ZNGA) and emphasized their views on the company. Zynga Inc. is a California-based game developer that currently has a $10.7 billion market capitalization. Since the beginning of the year, ZNGA delivered a 0.20% return, extending its 12-month gains to 55.5%. As of March 18, 2021, the stock closed at $9.89 per share.

Here is what Artisan Small Cap Fund has to say about Zynga Inc. in their Q4 2020 investor letter:

“We also added to our position in Zynga. Our multiyear investment campaign in Zynga has been based on a new management team’s ability to drive steady growth in the company’s base portfolio of games, expand margins, reinvigorate the new game development pipeline and use its strong balance sheet to acquire complementary games and studios. Shares have been pressured in recent quarters, presumably because of investor concerns about the company’s moderating growth rate and Apple’s pending new privacy policy which will make it more difficult for Zynga to both efficiently acquire new players and sell advertising in its games. We believe the company has multiple growth levers it can pull in the periods ahead, including the rollout of new games, acquisitions, further penetration into international markets and entry into new gaming categories, to name a few. Furthermore, our research suggests the Apple privacy policy change is manageable for larger mobile game developers such as Zynga. Given our strong conviction in the profit cycle, we used recent weakness to add to our position.”


Our calculations show that Zynga Inc. (NASDAQ: ZNGA) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Zynga Inc. was in 52 hedge fund portfolios, compared to 48 funds in the third quarter. ZNGA delivered a 2.91% return in the past 3 months.

The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 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. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

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Disclosure: None. This article is originally published at Insider Monkey.