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Alger: “Chegg (CHGG) is Positioned to Generate Long-Term Growth”

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Alger, an investment management firm, published its “Alger Weatherbie Specialized Growth Fund” fourth quarter 2021 investor letter – a copy of which can be downloaded here. During the fourth quarter, the largest portfolio sector weightings were Information Technology and Health Care. The largest sector overweight was Financials. The portfolio had no exposure to the Consumer Staples or utility sectors and negligible exposure to Communication Services. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.

Alger Weatherbie Specialized Growth Fund, in its Q4 2021 investor letter, mentioned Chegg, Inc. (NYSE: CHGG) and discussed its stance on the firm. Chegg, Inc. is a Santa Clara, California-based education technology company with a $3.5 billion market capitalization. CHGG delivered a -20.65% return since the beginning of the year, while its 12-month returns are down by -73.88%. The stock closed at $24.36 per share on January 26, 2022.

Here is what Alger Weatherbie Specialized Growth Fund has to say about Chegg, Inc. in its Q4 2021 investor letter:

"Chegg, Inc. was among the top detractors from performance. Chegg provides online textbook rentals and other internetdelivered services, such as homework help, tutoring and assistance with obtaining scholarships and finding internships. The company has been acquiring customers at low cost, in part because it is a leader in providing supplementary educational services to college students. Its Chegg Services offering helps students master subjects, get better grades, complete their degrees and pursue careers. While third quarter revenue and earnings before interest, taxes, depreciation and amortization (EBITDA) were generally in-line with expectations, commentary from management was negative due to a slowdown in the higher education industry with 2021 being the third consecutive year of enrollment declines. Management mentioned that Chegg’s core customer base consisting of state and community colleges and local university students who tend to be older and employed, has experienced outsized enrollment declines due to the pandemic and a tighter labor market. We believe that Chegg is positioned to generate long-term growth but we accept that the near term is likely to be challenging."

Our calculations show that Chegg, Inc. (NYSE: CHGG) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. CHGG was in 39 hedge fund portfolios at the end of the third quarter of 2021, compared to 38 funds in the previous quarter. Chegg, Inc. (NYSE: CHGG) delivered a -58.20% return in the past 3 months.

In November 2021, we also shared another hedge fund’s views on CHGG in another article. You can find other letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.

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