Longleaf Partners Fund, a Memphis-based fund under Southeastern Asset Management, recently released its Q3 2020 Investor Letter, a copy of which you can download here. The fund posted a return of 7.21% for the quarter, underperforming its benchmark, the S&P 500 Index which returned 8.93% in the same quarter. You should check out Longleaf Partners’ top 5 stock picks for investors to buy right now, which could be the biggest winners of 2021.
In the Q3 2020 Investor Letter, Longleaf Partners’ highlighted a few stocks and FedEx Corp (NYSE:FDX) is one of them. FedEx Corp (NYSE:FDX) is a delivery services company. Year-to-date, FedEx Corp (NYSE:FDX) stock gained 91% and on December 16th it had a closing price of $288.81. Here is what Longleaf Partners’ said:
“FedEx (81%, 3.44%), the transportation and logistics company, was the top contributor after reporting outstanding quarterly performance, with earnings more than 66% above estimates and excellent free cash flow (FCF) conversion. The disappearance of competing passenger airline underbelly capacity helped Express grow volumes 28%, while Ground proved its critical role in e-commerce logistics with a 31% volume increase. CEO Fred Smith’s ambitious goal to deliver 100 million e-commerce packages per year is now on track for 2023, years ahead of schedule. FedEx has found a profitable strategy with a long growth runway by working with major e-commerce competitors like Walmart and Target, and FedEx’s national retail presence offers an advantage in handling customer returns. Last October, Southeastern’s Vice-Chairman Staley Cates interviewed Fred Smith and Alan Graf on the Price-to-Value Podcast, as near maximum pessimism on the company was being priced in by the market. We maintained our conviction and added to the position in 2019, and that has been rewarded. In September, Staley wrote to the research team, “We have had plenty of companies over the past few years show the folly of thinking you know where earnings will go over several quarters, often in a disappointing way. This one again shows the folly of near-term earnings estimates but happily is a radical miss on the upside.” For perhaps the first time in our careers, we saw a sell side report price target more than double in a one-quarter period. Despite the stock’s rapid appreciation, with the new higher earnings estimates FedEx trades at a mid-teens price to earnings (P/E) multiple and a discount to our appraisal. There is additional upside as the company completes its long-awaited TNT integration and Ground’s traditional business-to-business (B2B) volumes return from their April nadir, helping maximize utilization and expand margins.”
In Q3 2020, the number of bullish hedge fund positions on FedEx Corp (NYSE:FDX) stock increased by about 54% from the previous quarter (see the chart here), so a number of other hedge fund managers believe in FedEx’s growth potential. Our calculations showed that FedEx Corp (NYSE:FDX) isn’t ranked among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
Video: Top 5 Stocks Among Hedge Funds
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