ClearBridge Investments, an investment management firm, has released its Q2 2021 Small Cap Value Strategy letter to investors – a copy of which can be downloaded here. The ClearBridge Small Cap Value strategy slightly outperformed the Russell 2000 Index, the benchmark for the strategy, during the second quarter. You can check out the top 5 holdings of the fund to get an idea of their top bets for 2021.
In ClearBridge Investments’ Q2 2021 letter to investors, the fund mentioned Everi Holdings Inc. (NYSE: EVRI) and discussed its position on the company. Everi Holdings Inc. is a Las Vegas, Nevada-based financial services company with a market capitalization of $ 2.3 billion. EVRI has returned 87.83% year-to-date, while its 12-month returns are up 203.39%. The stock closed at $ 24.18 per share on October 1, 2021.
Here’s what ClearBridge Investments has to say about Everi Holdings Inc. in its Q2 2021 letter to investors:
“Our strategy outperformed with strong results from consumer discretionary stocks such as Everi Holdings. Everi Holdings is a provider of casino games, cash access and customer relationship technologies to the gaming industry that outperformed as gaming activity and growth in new game placement delivered strong financial results . “
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Based on our calculations, Everi Holdings Inc. (NYSE: EVRI) was unable to secure a spot on our list of the 30 most popular stocks among hedge funds. EVRI was in 31 hedge fund portfolios at the end of the first half of 2021, compared to 24 funds in the previous quarter. Everi Holdings Inc. (NYSE: EVRI) has generated a return of 2.57% in the past 3 months.
The reputation of hedge funds as savvy investors has been tarnished over the past decade, as their hedged returns could not keep up with the unhedged returns of stock indexes. Our research has shown that small-cap hedge fund stock selection managed to beat the market by double digits every year between 1999 and 2016, but the margin for outperformance has shrunk in recent years. Nonetheless, we were still able to identify in advance a select group of hedge funds that have outperformed 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 margin of underperformance of these stocks has increased in recent years. Investors who are long in the market and short on these stocks would have reported more than 27% per year 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 originally appeared on Insider Monkey.