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Here’s Why Oakmark Global Fund Fully Exited its Rolls-Royce Holdings (RYCEY) Position

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Jose Karlo Mari Tottoc
·3 min read
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Oakmark Funds, an investment management firm, published its “Oakmark Global Fund” first quarter 2021 investor letter – a copy of which can be seen here. A return of 11.1% was reported by the fund for the Q1 of 2021, outperforming both its MSCI World benchmark that delivered a 4.9% return and the Lipper Global Fund Index that had 3.7% gain for the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Oakmark Global Fund, in their Q1 2021 investor letter, mentioned Rolls-Royce Holdings plc (NYSE: RYCEY) and shared their insights on the company. Rolls-Royce Holdings plc is a London, United Kingdom-based aerospace and defense company that currently has a $12.4 billion market capitalization. Since the beginning of the year, RYCEY delivered a 1.25% return, extending its 12-month gains to 6.16%. As of April 12, 2021, the stock closed at $1.5400 per share.

Here is what Oakmark Global Fund has to say about Rolls-Royce Holdings plc in their Q1 2021 investor letter:

"Rolls-Royce is one of the leading producers of wide-body aircraft engines, which are typically used in larger airplanes designed for long-haul and international travel. The Covid-19 pandemic has materially hurt the company’s business. Although we expect travel will rebound strongly following vaccine distribution, we believe it will take longer for long-haul and international travel to revert back to pre-pandemic levels. As a result, our intrinsic value estimate fell quite materially during the pandemic, though we continued to hold our position since the share price remained below our estimate of intrinsic value. As the share price moved closer to our estimate of intrinsic value in the fourth quarter, we began reducing our position until we were fully exited during the past quarter. We allocated the capital from the divesture of Rolls-Royce into securities with strong risk-return profiles."

15 Biggest US Government Cover Ups of All Time
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Alexey Y. Petrov/Shutterstock.com

Our calculations show that Rolls-Royce Holdings plc (NYSE: RYCEY) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. Rolls-Royce delivered a 4.90% 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.