Peloton (PTON)’s Valuation is “Back into an Attractive Range” According to Artisan Partners

Artisan Partners, a high value-added investment management firm, published its ‘Artisan Mid Cap Fund’ first quarter 2021 investor letter – a copy of which can be downloaded here. A return of -2.36% was recorded by its Investor Class: ARTMX, -2.32% by its Advisor Class: APDMX, and -2.30% by its Institutional Class: APHMX, in the fourth quarter of 2020, all below the Russell Midcap® Growth Index that delivered a -0.57% return and the Russell Midcap® Index that was up by 8.14% for the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Artisan Mid Cap Fund, in its Q1 2021 investor letter, mentioned Peloton Interactive, Inc. (NASDAQ: PTON), and shared their insights on the company. Peloton Interactive, Inc. is a New York, New York-based exercise equipment company that currently has a $24.6 billion market capitalization. Since the beginning of the year, PTON delivered a -44.86% return, while its 12-month gains are up by 89.62%. As of May 05, 2021, the stock closed at $82.62 per share.

Here is what Artisan Mid Cap Fund has to say about Peloton Interactive, Inc. in its Q1 2021 investor letter:

“Among our bottom Q1 contributors was Peloton Interactive. Peloton’s growth has accelerated throughout the pandemic as consumers replace in-person gym workouts with the company’s connected bikes and online classes. This has increased brand awareness, decreased the need for advertising spending and quickly proved the company’s high-margin, recurring revenue business model. These benefits were on clear display in Peloton’s Q4 results, which showed subscription growth trends remain robust entering 2021. However, this demand, combined with global supply chain bottlenecks, is resulting in bike shipment delays and has led the company to spend $100 million in the coming months to expedite deliveries. While this will pressure near-term profits, we expect trends to improve later this year as the company’s investments in manufacturing capacity bear fruit and as it rolls out a new, affordable treadmill. We trimmed our position early in the quarter based on valuation concerns, but the stock’s subsequent selloff brought the valuation back into an attractive range, in our view.”

Our calculations show that Peloton Interactive, Inc. (NASDAQ: PTON) 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, Peloton Interactive, Inc. was in 63 hedge fund portfolios, compared to 58 funds in the third quarter. PTON delivered a -46.95% 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.