Harding Loevner, an investment management firm, published its “Global Equity Fund” second-quarter 2021 investor letter – a copy of which can be downloaded here. A return of 10.70% was recorded by the fund for the Q2 of 2021, beating its Benchmark, the MSCI World Index, which returned 7.89% for the same period. You can take a look at the fund’s top 5 holdings to have an idea about their top bets for 2021.
In the Q2 2021 investor letter of Harding Loevner, the fund mentioned Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX) and discussed its stance on the firm. Vertex Pharmaceuticals Incorporated is a Boston, Massachusetts-based biopharmaceutical company with a $47.6 billion market capitalization. VRTX delivered a -22.31% return since the beginning of the year, while its 12-month returns are down by -31.53%. The stock closed at $183.61 per share on September 23, 2021.
Here is what Harding Loevner has to say about Vertex Pharmaceuticals Incorporated in its Q2 2021 investor letter:
“Among the largest detractors from relative performance (includes) Vertex Pharmaceuticals. Vertex fell after the company halted development of one of its drug candidates undergoing Phase 2 trials. The failure leaving some investors wondering if Vertex’s much-heralded research capabilities might not extend beyond its core franchise in cystic fibrosis, a view we respectfully reject.”
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Based on our calculations, Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. VRTX was in 60 hedge fund portfolios at the end of the first half of 2021, compared to 68 funds in the previous quarter. Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX) delivered a -5.52% 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.
