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Why Farfetch (FTCH) Stock is a Compelling Investment Case

Miller Value Partners recently released its Q2 2020 Investor Letter, a copy of which you can download here. The Opportunity Equity Fund posted a return of 47.02% for the quarter (net of fees), outperforming its benchmark, the S&P 500 Index which returned 20.54% in the same quarter. You should check out Miller Value Partners’ top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash.

In the said letter, Miller Value Partners highlighted a few stocks and Farfetch Ltd (NYSE:FTCH) is one of them. Farfetch Ltd (NYSE:FTCH) is an online luxury fashion retail platform. Year-to-date, Farfetch Ltd (NYSE:FTCH) stock gained 106.5% and on July 24th it had a closing price of $21.37. Here is what Miller Value Partners’ said:

“Farfetch Ltd (FTCH) gained 118.6% over the quarter as the company saw better than expected demand on their luxury platform. The company reported 1Q gross merchandise value (GMV) growth of 46% on the high-end of their prior guidance of 43-46% with revenue of $331M beating consensus of $313M with Earnings before income, taxes, depreciation and amortization (EBITDA) of -$22.3M ahead of consensus of -$27M. The company reported active customer growth of 27% to 2.15M, but they saw a lower average order size of $571. The company removed full-year guidance but noted that they expect to see year-over-year (YoY) growth in 2Q. Later in the period, the company moved higher after releasing new guidance that was above expectations. The company guided for GMV in 2Q of $605-630M versus consensus at $488M, representing 25-30% YoY growth with adjusted EBITDA improving YoY (2Q19 EBITDA was -$38M) versus consensus estimating -$46M. The company reiterated that they plan to be EBITDA profitable for the full year 2021.”

Pixabay/Public Domain

In Q1 2020, the number of bullish hedge fund positions on Farfetch Ltd (NYSE:FTCH)  stock decreased by about 19% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t seem to agree with Farfetch’s growth potential. Our calculations showed that Farfetch Ltd (NYSE:FTCH)  isn’t ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 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

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar lithium stock. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. You can subscribe to our free enewsletter below to receive our stories in your inbox:

Disclosure: None. This article is originally published at Insider Monkey.