Artisan Mid Cap Fund recently released its Q1 2020 Investor Letter, a copy of which you can download below. The fund posted a return of -11.55% for the quarter (investor class), outperforming their benchmark, the Russell Midcap Index which returned -27.07% in the same quarter. You should check out Artisan Mid Cap Fund’s top 5 stock picks which helped them beat the market by nearly 16 percentage points. There weren’t a lot of funds who could deliver these kinds of returns without shorting the market or using aggressive put options.
In the said letter, Artisan Mid Cap Fund highlighted a few stocks and Zoom Video Communications Inc. (NASDAQ:ZM) is one of them. Zoom Video Communications is a technology company based in California. Year-to-date, ZM stock gained 128.4% and on May 8th it had a closing price of $155.40. Its market cap is of $43.4 billion. Here is what Artisan Mid Cap Fund said:
“Video conferencing has been present in some organizations for years, but in limited, frustrating and expensive ways. While the technology has not lived up to its potential, Zoom’s low-cost capabilities (cloud-based hardware and software) and ease of use have been clear differentiators we believe could disrupt the corporate communication and collaboration landscape. More recently, our investment thesis has been bolstered by COVID-19 travel restrictions as corporations, schools, health care professionals, non-profits, etc., have been forced to conduct more or all their typical day-to-day activities remotely. Zoom’s video-conferencing capabilities have been instrumental during this time, enabling people to stay connected with one another. This crisis has dramatically increased the company’s brand awareness and, we believe, the likelihood video conferencing could become a more common substitute for travel going forward. While their astronomical growth (from 10MM daily users in December to 200MM in March) has presented some challenges—the need to invest in additional server capacity and the need to rapidly respond to concerns about the platform’s security—we believe the long-term profit cycle remains compelling with both its legacy product offerings (Zoom Meeting, Zoom Rooms, Zoom Conference Room Connector) and recent moves into phone and chat. We did, however, trim the position during the quarter based on valuation.”
In Q4 2019, the number of bullish hedge fund positions on ZM stock decreased by about 15% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t seem to agree with ZM’s growth potential.
Disclosure: None. This article is originally published at Insider Monkey.
