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Should You Buy Vroom Inc. (VRM) in 2021?

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Jose Karlo Mari Tottoc
·3 min read
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Miller Value Partners, an investment management firm, published its ‘Opportunity Equity’ fourth-quarter 2020 Investor Letter – a copy of which can be seen here. A net return of 35.4% was recorded by the fund for the Q4 of 2020, outperforming its S&P 500 benchmark that delivered a 12.15% return. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Miller Value Partners, in their Q4 2020 Investor Letter, said that Vroom, Inc. (NASDAQ: VRM) was a top detractor for their portfolio in the fourth quarter of 2020. Vroom, Inc. is a used car retailer and e-commerce company that currently has a $6.6 billion market cap. For the past 3 months, VRM delivered a decent 40.57% return and settled at $50.93 per share at the closing of February 12th.

Here is what Miller Value Partners has to say about Vroom, Inc. in their Q4 2020 investor letter:

"Vroom, Inc (VRM) continued to decline in the fourth quarter following the additional equity raise they did at the beginning of September at a price of $54.50. The company reported 3Q results above consensus with total revenue of $323M versus $311M estimated, gross profit of $25.4M versus $22.3m estimated leading to Adjusted EBITDA of -$35.7M ahead of expectations of -$42.1M. The company guided for revenue of $372M-$414M with the midpoint slightly below consensus of $398M with gross profit of $24-28M versus $27.7M estimated and adjusted EBITDA of -$52M to -$44M versus consensus of -$42.8M. The company is beginning a slow roll out of its last mile delivery and is working to build up its infrastructure to be able to handle the higher demand it is seeing. During the quarter, the company announced the purchase of CarStory, which does AI powered analytics and digital services, for $120mm in a deal split between cash and stock."

Used cars, used car, selling a used car
Used cars, used car, selling a used car

Copyright: sonyae / 123RF Stock Photo

Last December, we published an article telling that Vroom, Inc. (NASDAQ: VRM) was in 34 hedge fund portfolios, its all time high statistics. VRM delivered a 24.31% return in the past 12 months.

Our calculations show that Vroom, Inc. (NASDAQ: VRM) does not belong in our list of 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

https://youtu.be/OgBhPDmWMtI

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. 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. You can subscribe to our free daily newsletter on our website.

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