Polen Capital, an investment management firm, published its “Polen Focus Growth” third quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly gross return of 2.78% was delivered by the fund for the third quarter of 2021, outperforming both its Russell 1000 Growth benchmark that delivered a 1.16% return, and the S&P 500 Index that had a 0.59% gain for the same period. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
Polen Capital, in its Q3 2021 investor letter, mentioned Mastercard Incorporated (NYSE: MA) and discussed its stance on the firm. Mastercard Incorporated is a Purchase, Harrison-based financial services company with a $ 357.2 billion market capitalization. MA delivered a 1.42% return since the beginning of the year, while its 12-month returns are up by 14.16%. The stock closed at $360.86 per share on October 25, 2021.
Here is what Polen Capital has to say about Mastercard Incorporated in its Q3 2021 investor letter:
“Mastercard faced pressure as some believe these “old payment infrastructure” businesses will be disrupted by newer fintech companies using blockchain, buy now, pay later (BNPL), or other innovations to provide better/cheaper payment services. However, we believe that some of these technologies have meaningful limitations which could benefit existing payment networks. For example, BNPL transactions are often funded with cards and turn a one-time transaction into many smaller ones with more transaction fees for Mastercard. Just like with regulation, we continually monitor for competition and technological disruption. As of now, we do not see a significant risk in the foreseeable future to this company.”
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Based on our calculations, Mastercard Incorporated (NYSE: MA) ranks 6th in our list of the 30 Most Popular Stocks Among Hedge Funds. MA was in 156 hedge fund portfolios at the end of the first half of 2021, compared to 151 funds in the previous quarter. Mastercard Incorporated (NYSE: MA) delivered a -7.16% 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.
