Greenhaven Road Capital, an investment management firm, published its third-quarter 2021 investor letter – a copy of which can be downloaded here. The fund returned approximately -6% net for the third quarter, bringing YTD returns to approximately +14%. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
Green Haven Road, in its Q3 2021 investor letter, mentioned MarketWise, Inc. (NASDAQ: MKTW) and discussed its stance on the firm. MarketWise, Inc. is a United States-based multi-brand subscription services platform with a $2.5 billion market capitalization. MKTW delivered a -26.90% return since the beginning of the year, while its 12-month returns are down by -23.08%. The stock closed at $7.50 per share on November 2, 2021.
Here is what Greenhaven Road Capital has to say about MarketWise, Inc. in its Q3 2021 investor letter:
“MarketWise (MKTW) – During Q3, MarketWise reported their first quarter of earnings as a public company. I think it is fair to say that the market was underwhelmed. As of the writing of this letter, shares are down approximately 30% from our purchase price, which I thought was a fair one. As a reminder, MarketWise sells subscriptions to financial newsletters and related products. It is one of a very small handful of businesses that I know of that has grown to $500M+ in annual revenue with only $50,000 invested in the business to date. Gross margins are higher than most software companies at 86%, the company has been profitable all 20 years of operation, and revenue has grown for 18 of the 20 years. In the second quarter, they grew revenues 71%, generated over $50M in cash flow from operations, grew paid subscribers 45%, and grew free subscribers 75%…” (Click here to see the full text)
Based on our calculations, MarketWise, Inc. (NASDAQ: MKTW) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. MarketWise, Inc. (NASDAQ: MKTW) delivered a -43.82% 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.