Polen Capital, an investment management firm, has released its Q2 2021 “Polen International Growth” investor letter – a copy of which can be downloaded here. A return of 5.57% was generated by the fund for the second quarter of 2021, outperforming its benchmark MSCI All Country World Index which generated a return of 5.47% for the same period. You can take a look at the fund’s top 5 holdings to get an idea of their best bets for 2021.
In Polen Capital’s Q2 2021 letter to investors, the fund mentioned MercadoLibre, Inc. (NASDAQ: MELI) and discussed his position on the company. MercadoLibre, Inc. is an online marketplace company based in Buenos Aires, Argentina with a market capitalization of $91.2 billion. MELI has returned 9.58% year-to-date, extending its 12-month returns to 55.71%. The stock closed at $1,835.68 per share on August 26, 2021.
Here is what Polen Capital has to say about MercadoLibre, Inc. in its Q2 2021 Letter to Investors:
“Based in Argentina MercadoLibre operates the leading e-commerce website and digital wallet in Latin America. E-commerce and consumer credit are underutilized among the approximately 400 million citizens living in the company’s three largest markets: Brazil, Argentina and Mexico.
MercadoLibre’s native digital solution provides over 70 million users with an easy access point for online shopping and a digital wallet.
From humble beginnings as a third-party marketplace, MercadoLibre’s management has built the business over the past twenty years by steadily expanding the reach of the platform with new services tailored to both merchants and consumers. Today’s offerings include financing capabilities for buyers and sellers, logistics, loyalty programs, classifieds and grocery items. We believe that MercadoLibre can generate profits at a rate of 25% for the next five years.”
By our calculations, MercadoLibre, Inc. (NASDAQ: MELI) was unable to land a spot on our list of 30 most popular stocks among hedge funds. MELI was in 74 hedge fund portfolios at the end of the first half of 2021, compared to 69 funds in the previous quarter. MercadoLibre, Inc. (NASDAQ: MELI) has returned 35.11% over the past 3 months.
The reputation of hedge funds as savvy investors has been tarnished over the past decade because their hedged returns could not keep up with the unhedged returns of stock indices. Our research showed that hedge fund small-cap stock selection managed to beat the market by double digits every year between 1999 and 2016, but the margin of outperformance has shrunk in recent years. Nevertheless, we were still able to identify in advance a select group of hedge funds that have outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see details here). We were also able to identify in advance a select group of hedge funds that underperformed the market by 10 percentage points per year between 2006 and 2017. Interestingly, the underperformance margin for these stocks has increased in recent years. Investors who are long in the market and short in these stocks would have returned more than 27% per year between 2015 and 2017. We have been following and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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Disclosure: none. This article originally appeared on Insider Monkey.