Vulcan Value Partners: “We Believe that Upstart (UPST)’s Prospects are Very Bright”

Vulcan Value Partners, an investment management firm, published its “Large Cap, Small Cap, Focus Composite, Focus Plus Composite, and All Cap” fourth quarter 2020 investor letter – a copy of which can be downloaded here. Vulcan’s Large Cap, Small Cap and All Cap strategies beat both their primary and secondary benchmarks, while Focus and Focus Plus trailed their primary benchmarks but beat their secondary benchmarks. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Vulcan Value Partners, in their Q4 2020 investor letter, mentioned Upstart Holdings, Inc. (NASDAQ: UPST) and emphasized their views on the company. Upstart Holdings, Inc. is a San Carlos, California-based consumer lending company that currently has a $9.5 billion market capitalization. Since the beginning of the year, UPST delivered an impressive 217.25% return and as of March 30, 2021, the stock closed at $129.28 per share.

Here is what Vulcan Value Partners has to say about Upstart Holdings, Inc. in their Q4 2020 investor letter:

“Upstart Holdings Inc. is an artificial intelligence (AI) and cloud-based lending platform. The company uses AI models to underwrite superior loans with lower interest rates, lower default rates, higher approval rates, and increased underwriting automation. Consumers can access Upstart-powered loans through its banking partners’ websites; however, most of its loans are underwritten on Upstart has a fee-based revenue model and retains only a small portion of the loans, while the majority of the loans end up on the balance sheets of its partner banks or are sold into the capital markets. We believe Upstart’s technology is superior to the FICO score, which is ubiquitous within the consumer credit markets. With an excellent product and a very large total addressable market, we believe that Upstart’s prospects are very bright.”

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Our calculations show that Upstart Holdings, Inc. (NASDAQ: UPST) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Upstart Holdings, Inc. was in 15 hedge fund portfolios. UPST delivered a spectacular 114.18% return in the past month.