Artisan Partners Limited Partnership, a high value-added investment management firm, published its ‘Artisan Mid Cap Fund’ fourth quarter 2020 investor letter – a copy of which can be downloaded here. A return of 16.82% was recorded by its Investor Class: ARTMX, 16.87% by its Advisor Class: APDMX, and 16.89% by its Institutional Class: APHMX, in the fourth quarter of 2020, all below its Russell Midcap Growth Benchmark that delivered a 19.02% return and its Russel Midcap Index that was up by 19.91% in the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.
Artisan Mid Cap Fund, in their Q4 2020 investor letter, mentioned Wayfair Inc. (NYSE: W) and emphasized their views on the company. Wayfair Inc. is a Massachusetts-based online store company that currently has a $33.2 billion market capitalization. Since the beginning of the year, Wayfair Inc. delivered a 43.17% return, massively extending its 12-month gains to a whopping 1,197.35%. As of March 16, 2021, the stock closed at $314.17 per share.
Here is what Artisan Mid Cap Fund has to say about Wayfair Inc. in their Q4 2020 investor letter:
“Among our bottom individual contributors was Wayfair. Wayfair, a leading online furniture retailer, experienced a remarkable turn of events in 2020. The company began the year with heavy losses and a stressed balance sheet, having overinvested in headcount and advertising in recent years. This prompted the company to impose a round of layoffs to quickly put it on a path to profitability in the US, despite a more modest sales growth rate than the company had historically experienced. This move was later enhanced by the pandemic as physical retail store closures and a wave of consumer investments in their homes led to a dramatic increase in sales. Profitability has been pulled forward several years, and we are seeing signs the company is exiting its peak investment period. That said, the stock underperformed in Q4 as investors began anticipating a material slowdown in growth in 2021 as the pandemic benefits begin to normalize. We acknowledge this likelihood—and are being cautious with our position size as a result—but we believe the longer-term profit cycle opportunity is compelling with lightly penetrated markets both domestically and internationally for online home goods as well as an opportunity to move into adjacent categories (wedding registry, home improvement, seasonal décor, mattresses, etc.).”
Our calculations show that Wayfair Inc. (NYSE: W) 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, Wayfair Inc. was in 40 hedge fund portfolios. Wayfair delivered an 18.39% return in the past 3 months.
The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 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. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
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