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Trade Desk (TTD), Richie Capital’s Top Performer

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Richie Capital Group, an investment management firm, published its second quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly portfolio net return of 2.6% was recorded by the RCG Long Only strategy for the second half of 2021, while the RCG Long Short Fund lost 2.5% for the same period. The fund's closest benchmarks, the Russell 3000 Index and the Equity Long Short Index gained 8.2% and 2.6% for the quarter respectively. You can view the fund’s top 5 holdings to have an idea about their top bets for 2021.

In the Q2 2021 investor letter of Richie Capital Group, the fund mentioned The Trade Desk, Inc. (NASDAQ: TTD), and discussed its stance on the firm. The Trade Desk, Inc. is a California-based software company, that currently has a $34.08 billion market capitalization. TTD delivered a -10.54% return since the beginning of the year, while its 12-month revenues are up by 61.36%. The stock closed at $70.94 per share on July 19, 2021.

Here is what Richie Capital Group has to say about The Trade Desk, Inc. in its Q2 2021 investor letter:

"The Trade Desk (TTD – up 26.3%) – Shares in the programmatic advertising specialist rebounded during the quarter after selling off in Q1. The selloff was part of the previously mentioned market move away from higher priced technology names. The rebound in Q2 was due to Google delaying its phase out of third-party cookies in its Chrome browser to mid to late 2023. This is positive news, but TTD is prepared for the inevitable transition away from cookies. The company has built an industry alternative called UID 2.0 which asks users’ permission to receive targeted ads on websites.

UID 2.0 has gained more traction in the digital ad industry vs competing alternatives with many major publishers and advertisers on board. Additionally, TTD’s business is diversified across numerous channels including video, audio, in-app, native and social. Connected TV is currently their fastest growing business, and cookies are meaningless on that platform as ads are based on first-party data."

software
software

Photo by Hack Capital on Unsplash

Based on our calculations, The Trade Desk, Inc. (NASDAQ: TTD) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. The Trade Desk, Inc. was in 35 hedge fund portfolios at the end of the first quarter of 2021, compared to 35 funds in the fourth quarter of 2020. TTD delivered a 4.39% 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, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 10 best battery 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.