Should You Consider Investing in Trebia Acquisition Corp. (TREB)?

Alphyn Capital Management, an investment management firm, published its second quarter 2021 investor letter – a copy of which can be downloaded here.  A quarterly portfolio net return of 6.6%, and 13.8% gains was recorded by the fund for the second half of 2021, below its S&P 500 TR benchmark that delivered a 15.3% return for the same period. You can view the fund’s top 5 holdings to have an idea about their top bets for 2021.

In the Q2 2021 investor letter of Alphyn Capital Management, the fund mentioned Trebia Acquisition Corp. (NYSE: TREB), and discussed its stance on the firm. Trebia Acquisition Corp. is a US-based blank check company, that currently has a $641.05 million market capitalization. TREB delivered a -8.16% return since the beginning of the year, while its 3-month revenues are down to -0.90%. The stock closed at $9.91 per share on July 19, 2021.

Here is what Alphyn Capital Management has to say about Trebia Acquisition Corp. in its Q2 2021 investor letter:

“On June 29th, Trebia announced an agreement to acquire System1, a digital advertising platform that is profitable on a GAAP basis, for $1.4bn, to a resounding snore by the market. For now, at least, the SPAC market seems genuinely dead. The risk to our capital is minimal given the cash NAV supporting the price, at least until the redemption date. Helpfully, Bill Foley has also agreed to a $200m backstop to the transaction against potential investor redemptions. This gives us time to assess the deal further and see if the market warms up to the transaction.”

Based on our calculations, Trebia Acquisition Corp. (NYSE: TREB) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. Trebia Acquisition Corp. was in 42 hedge fund portfolios at the end of the first quarter of 2021, compared to 33 funds in the fourth quarter of 2020. TREB delivered a  0.81% return in the past month.

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.