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Is Nielsen Holdings (NLSN) A Smart Long-Term Buy?

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Ariel Investments, an investment management firm, published its fourth-quarter 2020 ‘Ariel Fund', 'Ariel Appreciation Fund’, 'Ariel Focus Fund', 'Ariel International Fund', and 'Ariel Global Fund' Investor Letter – a copy of which can be downloaded here. In the fourth quarter of 2020, a return of 31.56% was recorded by Ariel fund, 23.57% by Ariel Appreciation Fund, 21.62% by Ariel Focus Fund, 8.26% by Ariel International Fund, and 9.80% return by Ariel Global Fund. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Ariel Investments, in their Q4 2020 investor letter, emphasized that they increased their position in Nielsen Holdings plc (NYSE: NLSN) in the past quarter. Nielsen Holdings plc is a New York-based analytics company that offers objective understanding of the media industry by collecting data that evaluates what consumers watch and buy. It currently has a $9.4 billion market capitalization. Since the beginning of the year, NLSN is up 25.83%, decently extending its 12-month gains to 63.61%. As of March 8, 2021, the stock closed at $26.26 per share.

Here is what Ariel Investments has to say about Nielsen Holdings plc in their Q4 2020 investor letter:

"In the fourth quarter, we steadily increased our position in Nielsen Holdings PLC (NLSN). While Envista and Core Labs were both contributors for the year, Nielsen and MSGE were detractors. Our considerations and actions throughout such an eventful year, as well as the subsequent performance of these companies—two that soared and two that we believe will soar—illustrate our approach to long-term, patient investing.

We believe Nielsen Holdings PLC continues to present a compelling opportunity. The stock languished until the bottom fell out for no apparent reason. The abrupt price dislocation enabled us to buy shares in size. The company’s television ratings are the de facto currency for media and advertising decisions totaling hundreds of billions of dollars globally. Nielsen’s consumer purchase data is unmatched in scope and scale and remains mission-critical information for the world’s leading consumer packaged goods players. Lately, its languishing share price reflects a company attempting a turnaround in an industry that is being disrupted. In terms of coronavirus impact, the overall business is resilient and highly recurring, but there are discretionary businesses around the edges that are feeling the pain from tighter budgets and unique situations, like limited live sports. While leverage on its balance sheet heightens the degree of difficulty, the company is fast-tracking its cost cutting and efficiency efforts to preserve margins and liquidity. Recent headwinds have reignited long-standing bear arguments that increasing consumer fragmentation poses an existential threat to the business. By contrast, we believe fragmentation makes Nielsen’s total audience measurement data more valuable. Spinning off the challenged Connect business which measures grocery sales was a good move since the area is fraught with competition and scalability issues. Early indications are that Wall Street agrees, as Nielsen shares continue to recover from their summer lows. With the stock more or less flat over the last twelve months, we believe more value is likely to be unlocked in the years to come."

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Our calculations show that Nielsen Holdings plc (NYSE: NLSN) 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, Nielsen Holdings plc was in 34 hedge fund portfolios compared to 30 funds in the third quarter. NLSN delivered a 49.89% 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.