Polen Capital, an investment management company, released its “Polen U.S. Small Company Growth Fund” second quarter 2022 investor letter. A copy of the same can be downloaded here. In the second quarter, the fund returned -25.81% net of fees compared to a -19.25% return for the Russell 2000 Growth Index. The fund underperformed in the second quarter due to widespread economic slowdown. In addition, please check the fund’s top five holdings to know its best picks in 2022.
In the second quarter 2022 investor letter, Polen Capital discussed stocks like Progyny, Inc. (NASDAQ:PGNY). Headquartered in New York, New York, Progyny, Inc. (NASDAQ:PGNY) is a fertility benefits management company. On September 29, 2022, Progyny, Inc. (NASDAQ:PGNY) stock closed at $38.65 per share. One-month return of Progyny, Inc. (NASDAQ:PGNY) was 2.90% and its shares gained 32.44% of their value over the last 52 weeks. Progyny, Inc. (NASDAQ:PGNY) has a market capitalization of $3.559 billion.
Here is what Polen Capital specifically said about Progyny, Inc. (NASDAQ:PGNY) in its Q2 2022 investor letter:
“Progyny, Inc. (NASDAQ:PGNY) is a fertility benefits manager for self-insured companies and their employees. Like Revolve, the underlying fundamentals of the business remain robust, and we believe the outsized weakness during the quarter was sentiment-driven based on investors’ recessionary fears. In our view, this is a short-sighted concern that overlooks Progyny’s nascent opportunity to penetrate a large and rapidly growing market with an advantaged, “patient-first” business model. Progyny’s comprehensive fertility solutions are top of mind for employers looking to drive better diversity, equity and inclusion efforts and it’s also a way for companies to stay competitive in attracting and retaining talent. As a medical benefits provider, they should be relatively insulated should economic conditions worsen, especially compared to more “nice to have” employee benefits.”
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Progyny, Inc. (NASDAQ:PGNY) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 21 hedge fund portfolios held Progyny, Inc. (NASDAQ:PGNY) at the end of the second quarter which was 18 in the previous quarter.
We discussed Progyny, Inc. (NASDAQ:PGNY) in another article and shared Baron Funds’ views on the company. In addition, please check out our hedge fund investor letters Q2 2022 page for more investor letters from hedge funds and other leading investors.
Disclosure: None. This article is originally published at Insider Monkey.
Warren Buffett never mentions this but he is one of the first hedge fund managers who unlocked the secrets of successful stock market investing. He launched his hedge fund in 1956 with $105,100 in seed capital. Back then they weren’t called hedge funds, they were called “partnerships”. Warren Buffett took 25% of all returns in excess of 6 percent.
For example S&P 500 Index returned 43.4% in 1958. If Warren Buffett’s hedge fund didn’t generate any outperformance (i.e. secretly invested like a closet index fund), Warren Buffett would have pocketed a quarter of the 37.4% excess return. That would have been 9.35% in hedge fund “fees”.
Actually Warren Buffett failed to beat the S&P 500 Index in 1958, returned only 40.9% and pocketed 8.7 percentage of it as “fees”. His investors didn’t mind that he underperformed the market in 1958 because he beat the market by a large margin in 1957. That year Buffett’s hedge fund returned 10.4% and Buffett took only 1.1 percentage points of that as “fees”. S&P 500 Index lost 10.8% in 1957, so Buffett’s investors actually thrilled to beat the market by 20.1 percentage points in 1957.
Between 1957 and 1966 Warren Buffett’s hedge fund returned 23.5% annually after deducting Warren Buffett’s 5.5 percentage point annual fees. S&P 500 Index generated an average annual compounded return of only 9.2% during the same 10-year period. An investor who invested $10,000 in Warren Buffett’s hedge fund at the beginning of 1957 saw his capital turn into $103,000 before fees and $64,100 after fees (this means Warren Buffett made more than $36,000 in fees from this investor).
As you can guess, Warren Buffett’s #1 wealth building strategy is to generate high returns in the 20% to 30% range.
We see several investors trying to strike it rich in options market by risking their entire savings. You can get rich by returning 20% per year and compounding that for several years. Warren Buffett has been investing and compounding for at least 65 years.
So, how did Warren Buffett manage to generate high returns and beat the market?
In a free sample issue of our monthly newsletter we analyzed Warren Buffett’s stock picks covering the 1999-2017 period and identified the best performing stocks in Warren Buffett’s portfolio. This is basically a recipe to generate better returns than Warren Buffett is achieving himself.
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