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First Eagle Investment Management, an investment management firm, published its second-quarter 2021 investor letter – a copy of which can be downloaded here. A net return of 4.73% was delivered by the fund for the first half of 2021. The Fund underperformed the MSCI World Index which returned 13.05% for the same period. You can take a look at the fund’s top 5 holdings to have an idea about their top bets for 2021.
In the Q2 2021 investor letter of First Eagle Investment Management, the fund mentioned Oracle Corporation (NYSE: ORCL) and discussed its stance on the firm. Oracle Corporation is an Austin, Texas-based computer software company with a $241.2 billion market capitalization. ORCL delivered a 33.54% return since the beginning of the year, while its 12-month returns are up by 41.76%. The stock closed at $86.39 per share on September 14, 2021.
Here is what First Eagle Investment Management has to say about Oracle Corporation in its Q2 2021 investor letter:
"Oracle continues to make progress reinventing itself for the cloud-computing environment that prevails today and competes in what we believe is a huge addressable market in the public cloud. It has begun to gain traction with the subscription model for its services, and the strong results posted for its most recent quarter demonstrated the stickiness of its business. The company has been a strong cash flow generator in recent years and has consistently returned excess cash to shareholders in the form of dividends and share buybacks."
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Based on our calculations, Oracle Corporation (NYSE: ORCL) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. ORCL was in 55 hedge fund portfolios at the end of the first half of 2021, compared to 52 funds in the previous quarter. Oracle Corporation (NYSE: ORCL) delivered a 5.82% return in the past 3 months.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage.
Disclosure: None. This article is originally published at Insider Monkey.