Miller Value Partners, an investment management firm, published its “Miller Opportunity Equity” third quarter 2021 investor letter – a copy of which can be seen here. A quarterly net decline of 14.2% has been recorded by the fund for the third quarter of 2021, compared to the S&P 500 that rose 0.6% in 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.
Miller Value Partners, in its Q3 2021 investor letter, mentioned Vroom, Inc. (NASDAQ: VRM) and discussed its stance on the firm. Vroom, Inc. is a United States-based used car retailer and e-commerce company with a $2.6 billion market capitalization. VRM delivered a -52.48% return since the beginning of the year, while its 12-month returns are down by -53.93%. The stock closed at $19.47 per share on November 4, 2021.
Here is what Miller Value Partners has to say about Vroom, Inc. in its Q3 2021 investor letter:
“Vroom, Inc. (VRM) was down 47.31% after reporting earnings that beat expectations but disappointed on guidance. Revenue of $761.9M beat consensus of $647.4M with EBITDA of -$60.7M slightly beating consensus of -$60.9M. The company guided for total revenue of $858-$891M versus consensus of $699M, but both gross margins and EBITDA disappointed. The company’s gross margin guidance of 6.2% was well below expectations of 8.8% leading to EBITDA of -$100M to -$92M against expectations -$59.4M as the company continues to invest for growth. The company also announced the appointment of Robert Krakowiak as CFO effective immediately, with David Jones remaining with the company through the end of November.”
Photo by Nima Sarram on Unsplash
Based on our calculations, Vroom, Inc. (NASDAQ: VRM) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. VRM was in -47.35%) hedge fund portfolios at the end of the first half of 2021, compared to 21 funds in the previous quarter. Vroom, Inc. (NASDAQ: VRM) delivered a -47.35% 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.
