Is Encore Capital (ECPG) A Smart Long-Term Buy?
Bernzott Capital Advisors, an investment management firm, published its fourth quarter 2020 investor letter – a copy of which can be downloaded here. A return of 24.41% was recorded by the fund in the fourth quarter of 2020, below its R2000V and R2500V benchmarks that delivered a 33.36% and 28.51% return respectively in the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.
Bernzott Capital Advisors, in their Q4 2020 investor letter, mentioned Encore Capital Group, Inc. (NASDAQ: ECPG) and emphasized their views on the company. Encore Capital Group, Inc. is a San Diego, California-based consumer banking company that currently has a $1.3 billion market capitalization. Since the beginning of the year, ECPG delivered a 4.49% return, while its 12-month gains are impressively up by 46.19%. As of March 23, 2021, the stock closed at $40.70 per share.
Here is what Bernzott Capital Advisors has to say about Encore Capital Group, Inc. in their Q4 2020 investor letter:
"Encore Capital Group (ECPG): A debt recovery business operating in the US and Europe, is positioned to benefit from an anticipated 2H rise in consumer delinquencies and lender charge-offs. This cycle has been unusual with government stimulus payments and forbearance programs forestalling typical economic rhythms. This has created short-term uncertainty for the company's outlook and weighed on the valuation which, we believe, gives rise to the stock's investment appeal with trends shifting in its favor. Other positives include recently crystallized CFPB collection guidelines, the company's success reducing collection costs by use of digital channels, and its strong balance sheet ready to capitalize on an increase in supply of defaulted portfolios to purchase later in 2021."
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Our calculations show that Encore Capital Group, Inc. (NASDAQ: ECPG) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Encore Capital Group, Inc. was in 20 hedge fund portfolios. ECPG delivered an 8.39% return in the past 3 months.
The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 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. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
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Disclosure: None. This article is originally published at Insider Monkey.
