Vulcan Value Partners, an investment management firm, has released its second quarter 2021 “Large Cap, Small Cap, Focus Composite, Focus Plus Composite and All Cap Composite” letter to investors – a copy of which can be downloaded here. Vulcan’s large-cap composite fund generated a net return of 12.4% for the second quarter of 2021, 9.9% for the small-cap fund, 14.8% for the Focus composite fund, 13.9% yield for the Focus Plus composite fund and 13.6% were gained. by the All Cap Composite Fund for the same period. You can check out the top 5 holdings of the fund to get an overview of their top bets for 2021.
In Vulcan Value Partners’ Q2 2021 letter to investors, the fund mentioned KKR & Co. Inc. (NYSE: KKR) and discussed its position on the company. KKR & Co. Inc. is a New York, New York-based private equity firm that currently has a market capitalization of $ 39.1 billion. KKR has generated a return of 66.07% year-to-date, extending its 12-month returns to 82.22%. The stock closed at $ 67.24 per share on August 5, 2021.
Here’s what Vulcan Value Partners has to say about KKR & Co. Inc. in its Q2 2021 letter to investors:
“KKR & Cie Inc. was also a significant contributor during the quarter. This company maintains deep and growing relationships with providers of capital. The company has a stable management fee stream and a proven ability to convert investor capital into a performance fee stream. These attributes contribute to its stable and growing intrinsic values. In addition, the company is benefiting from a good tailwind from increasing allocations to private and alternative investments. We are happy to continue to own KKR & Co. “
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Based on our calculations, KKR & Co. Inc. (NYSE: KKR) was unable to land a spot on our list of the 30 most popular stocks among hedge funds. KKR was in 56 hedge fund portfolios at the end of the first quarter of 2021, compared to 54 fund in the fourth quarter of 2020. KKR & Co. Inc. (NYSE: KKR) has generated a return of 14.51% 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 indices. 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.