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L1 Capital International Fund released its Q3 2020 Investor Letter, a copy of which you can download here. The Fund posted a return of 5.1% for the quarter, outperforming the benchmark Index which returned 3.7% in the same quarter. You should check out L1 Capital International Fund's top 5 stock picks for investors to buy right now, which could be the biggest winners of 2021.
In the Q3 2020 Investor Letter, L1 Capital International Fund highlighted a few stocks and Intuit Inc (NASDAQ:INTU) is one of them. Intuit Inc (NASDAQ:INTU) is a software company. In the last one year, Intuit Inc (NASDAQ:INTU) stock gained 36% and on January 8th it had a closing price of $374.46. Here is what L1 Capital International Fund said:
"Intuit epitomises the consistency, predictability and longevity of growth we seek in high quality businesses.
Intuit currently operates through 2 main divisions:
Intuit also provides personal financial software and services through its Mint and Turbo products and has announced the acquisition of Credit Karma for US$7.1 billion which will significantly expand its personal finance capabilities, creating a third leg to Intuit’s growth stool.
Intuit’s tax capabilities also include software and services for professional accountants in the United States and Canada.
Intuit has made 5 “big bets” which extend across its divisions and drive its operating strategy and growth profile:
These “big bets” support consistent, predictable growth in all of Intuit’s key businesses:
We believe the best is yet to come for Intuit, requiring a vision of future potential that is only just beginning to be realised. Through QuickBooks, Intuit has unique, comprehensive customer data, and can be the “source of truth” for small businesses. Intuit can assist its customers use their data to save money improve cashflows, such as optimising working capital, financing terms and business requirements such as insurance.
The same opportunity exists in helping individuals optimise their financial position, combining tax return information with Turbo, Mint and, in time, Credit Karma, to not only enhance tax refunds, but also lower borrowing costs, increase savings rates and reduce expenses.
All these opportunities do not come cheaply. In FY2020 Intuit generated revenue of US$7.7 billion across the group and fully expensed US$1.2 billion or 16% of revenue on research and development activities. In comparison, in FY2020 Xero had total revenue of around US$0.5 billion and spent around US$160 million on product design and development costs (of which 45% was capitalised). We believe Intuit’s dominant market position will continue to strengthen due to its much greater size and scope of activities, and ongoing investment in its business.
Intuit’s financial profile is exceptionally attractive:
Management is led by Sasan Goodarzi who has held senior management positions at Intuit for the past 14 years. Scott Cook co‑founded Intuit in 1983 and remains a Board member and significant shareholder.
Intuit is trading on around 30x FY2021 EBITA, 42x FY 2021 PE, 2.5% free cashflow yield and provides a dividend yield of around 1%. While the near‑term earnings and cashflow multiples optically are relatively high, we believe they fairly reflect Intuit’s attractive business, industry, management and financial attributes, including its consistent, predictable and long‑term growth profile. Intuit will continue to deliver strong value to shareholders for many years to come, with our base case implying a double‑digit annual return for this investment."
In Q3 2020, the number of bullish hedge fund positions on Intuit Inc (NASDAQ:INTU) stock increased by about 2% from the previous quarter (see the chart here), so a number of other hedge fund managers believe in Intuit's growth potential. Our calculations showed that Intuit Inc (NASDAQ:INTU) isn't ranked among 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
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Disclosure: None. This article is originally published at Insider Monkey.