Polen Capital Management, a value-driven, concentrated, long-term investment management firm, published its ‘Polen U.S. Small Company Growth’ fourth-quarter 2020 Investor Letter – a copy of which can be downloaded here. A gross return of 29.14% was recorded by the fund for the Q4 of 2020, slightly below its Russell 2000 Growth benchmark that delivered a 29.61% return. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.
Polen Capital Management, in their Q4 2020 investor letter, mentioned Endava plc (NYSE: DAVA) and shared their insights on the company. Endava plc is a United Kingdom-based software company that currently has a $5.1 billion market capitalization. Since the beginning of the year, DAVA delivered a 9.89% return, extending its 12-month gains to 143.41%. As of April 01, 2021, the stock closed at $84.34 per share.
Here is what Polen Capital Management has to say about Endava plc in their Q4 2020 investor letter:
“During the quarter, we initiated positions in Endava. Endava is an IT consulting firm that helps clients develop new solutions, products, and technology to evolve their businesses. It models itself on providing near-shore delivery centers in the same approximate time zone as its customers but in lower labor cost markets. This strategy results in Endava setting up locations in places like Moldova, where it is an employer of choice and has access to large pools of highly skilled labor at a lower cost. We believe the addressable market for its services is large and could grow at a mid-teens rate. Interestingly, the company has generated approximately 90% of its revenue over the past five years from existing clients, which we believe implies that Endava has been successful at building and growing client relationships. As a testament to the power of positive referrals, 80% of new clients hire Endava without an RFP. This allows the company to enjoy low customer acquisition costs with a high lifetime value. We believe the company can compound intrinsic value at an approximate 30% rate for the foreseeable future driven primarily by top-line growth and, to a lesser extent, margin expansion on the back of price increases and operating leverage.”
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Our calculations show that Endava plc (NYSE: DAVA) 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, Endava plc was in 10 hedge fund portfolios, compared to 11 funds in the third quarter. DAVA delivered a 9.89% 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.
