Wasatch Advisors, an employee-owned investment manager, published its ‘Wasatch Micro Cap Value Fund’ third-quarter 2020 Investor Letter – a copy of which can be downloaded here. A return of 11.62% was recorded by the fund for the Q3 of 2020, above its Russel Microcap benchmark that returned 3.69%. You can view the fund’s top 10 holdings to have a peek at their top bets for 2021.
Wasatch Advisors, in their Q3 2020 Investor Letter said that they believe in the capabilities of Open Lending Corporation (NASDAQ: LPRO) and that they are willing to keep it inside their portfolio through good times and bad times since it is a modern technology leader that arrived too early on its time. Open Lending Corporation is a financial services company that currently has a $4.8 billion market cap. For the past 3 months, LPRO delivered a 39.45% return and settled at $38.15 per share at the closing of January 15th.
Here is what Wasatch Advisors has to say about Open Lending Corporation in their Investor Letter:
“Another strong contributor was Open Lending Corp. (LPRO), which specializes in loan analytics, risk-based pricing, modeling and automated decision technology for automotive lenders. Although classified in the financials sector, Open Lending is an example of our unique approach to financials because the company doesn’t incur any credit risks—a characteristic that’s very attractive to us. Instead, the company offers a fee-based platform that’s particularly good at helping lenders assess the safety of providing financing for car buyers who are neither top-tier nor bottom-tier borrowers. In turn, the lenders have a better sense of what interest rate to charge on a specific auto loan. Because Open Lending’s platform is so
effective, business has been quite strong. Moreover, adding customers isn’t particularly capital- or labor-intensive. So a high percentage of revenue drops to the bottom line.
We had good timing in our purchase of Open Lending, which we did by investing in a special purpose acquisition company (SPAC). In the past, SPACs were often viewed negatively due to many quality problems. But they’ve improved quite significantly in recent years. When it was announced that a SPAC was going to acquire Open Lending, we had time to do our intensive investment research. As a result, we bought a large position just before the SPAC was converted into the operating company that is now Open Lending Corp.”
Last October 2020, we published an article telling that Open Lending Corporation (NASDAQ: LPRO) was in 20 hedge fund portfolios, its all time high statistics. LPRO delivered a massive 264.29% return in the past 12 months.
As of September 2020, Wasatch Advisors had a 6.4 million share position in LPRO that amounted to $164 million. However, our calculations showed that Open Lending Corporation (NASDAQ: LPRO) does not belong to 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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Disclosure: None. This article is originally published at Insider Monkey.