Here’s Why Argosy Investors Dumped its Cboe Global Markets (CBOE) Shares
Argosy Investors, an investment management firm, published its second quarter 2021 investor letter – a copy of which can be downloaded here. A portfolio return of 16.5% was recorded by the fund for the second half of 2021, while the S&P 500 by comparison returned 15.3%. 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 Argosy Investors, the fund mentioned Cboe Global Markets, Inc. (NASDAQ: CBOE), and discussed its stance on the firm. Cboe Global Markets, Inc. is a Chicago, Illinois-based stock exchange operator, that currently has a $13.1 billion market capitalization. CBOE delivered a 31.73% return since the beginning of the year, extending its 12-month returns to 43.33%. The stock closed at $120.68 per share on August 02, 2021.
Here is what Argosy Investors has to say about Cboe Global Markets, Inc. in its Q2 2021 investor letter:
"I sold CBOE during the quarter because I have been trying to trim ideas that are no longer great values or I simply did not believe I would ever make the position meaningful. This exercise to rationalize the portfolio to allow greater concentration is ongoing. In any event, there was nothing wrong with CBOE except that I did not have strong conviction in it, and I have been finding other ideas that I find more compelling so I kicked this stock to the curb to make room for others."
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Based on our calculations, Cboe Global Markets, Inc. (NASDAQ: CBOE) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. CBOE was in 33 hedge fund portfolios at the end of the first quarter of 2021, compared to 38 funds in the fourth quarter of 2020. Cboe Global Markets, Inc. (NASDAQ: CBOE) delivered a 13.70% 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.
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Disclosure: None. This article is originally published at Insider Monkey.
