L1 Capital, an investment management firm, published its ‘L1 Capital International Fund’ third quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly net return of 3.7% was recorded by the fund in the second quarter of 2021, compared to the benchmark return of 3.9% You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
L1 Capital, in its Q3 2021 investor letter, mentioned Thermo Fisher Scientific Inc. (NYSE: TMO) and discussed its stance on the firm. Thermo Fisher Scientific Inc. is a Waltham, Massachusetts-based scientific instrumentation, reagents and consumables, and software services provisioner with a $255.7 billion market capitalization. TMO delivered a 39.42% return since the beginning of the year, while its 12-month returns are up by 35.57%. The stock closed at $632.36 per share on November 15, 2021.
Here is what L1 Capital has to say about Thermo Fisher Scientific Inc. in its Q3 2021 investor letter:
“Included in these adjustments, in early July 2021, we divested our remaining small investment in Thermo Fisher Scientific (Thermo Fisher), the world leader in the provision of equipment, consumables, and services to the Life Sciences industry. Thermo Fisher has benefited from elevated demand for its products and services associated with COVID-19 and we sold our residual investment at a gain of more than 70% compared to our average investment cost. Thermo Fisher subsequently held an Investor Day and positively surprised many people, including us, with very strong medium-term growth targets, notwithstanding a headwind from normalisation of COVID-19-related business. Thermo Fisher is a high-quality business and remains on our ‘Bench’ for potential reinvestment.”
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Based on our calculations, Thermo Fisher Scientific Inc. (NYSE: TMO) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. TMO was in 87 hedge fund portfolios at the end of the first half of 2021, compared to 79 funds in the previous quarter. Thermo Fisher Scientific Inc. (NYSE: TMO) delivered a 16.82% 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.
