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Is Chegg (CHGG) Still a Worthy Investment Choice?

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Artisan Partners, a high value-added investment management firm, published its ‘Artisan Mid Cap Fund’ fourth quarter 2021 investor letter – a copy of which can be downloaded here. A return of -0.72% was recorded by its Investor Class: ARTMX, -0.68% by its Advisor Class: APDMX, and -0.66% by its Institutional Class: APHMX, in the fourth quarter of 2021, all underperforming the Russell Midcap® Growth Index that delivered a 2.85% return, and the Russell Midcap® Index that was up by 6.44% for the same period. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.

Artisan Mid Cap 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 $3.8 billion market capitalization. CHGG delivered a -7.85% return since the beginning of the year, while its 12-month returns are down by -73.99%. The stock closed at $28.29 per share on February 21, 2022.

Here is what Artisan Mid Cap Fund has to say about Chegg, Inc. in its Q4 2021 investor letter:

"Short-term market dynamics aside, we did experience several disappointing profit cycle developments during the quarter, Chegg and Roku in particular. Chegg is a digital education platform. A pattern of steady long-term growth in US subscribers surprisingly came to an end when it reported Q3 results. This precipitated a sharp decline in the company’s valuation and our estimate of its private market value (PMV). Management cited factors such as fewer enrollees in 2-year colleges (lured into the workforce by higher wages) and less need for study aides as COVID-related pressures have resulted in students taking less-challenging courses and professors assigning lighter workloads. We view these explanations as mostly logical, but we also believe US penetration of the company’s services has become relatively mature. These headwinds could persist for at least the next few quarters, and we are currently evaluating whether other long-term growth drivers—international subscriber growth, new services—remain intact. Meanwhile, it represents a very small GardenSM position in our portfolio."

Photo by Compare Fibre on Unsplash

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 41 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 39 funds in the previous quarter. Chegg, Inc. (NYSE: CHGG) delivered a 6.63% return in the past 3 months.

In January 2022, 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.