Fiduciary Management, an investment management firm, published its “International Equity Fund” second quarter 2021 investor letter – a copy of which can be downloaded here. The FMI International portfolios gained approximately 4.7% (currency hedged) and 4.8% (currency unhedged) in the period, respectively, which compares with an MSCI EAFE Index gain of 4.79% in local currency (LOC) and 5.17% in U.S. Dollars (USD). You can view the fund’s top 5 holdings to have an idea about their top bets for 2021.
In the Q2 2021 investor letter of Fiduciary Management, the fund mentioned DBS Group Holdings Ltd (NYSE: DBSDY), and discussed its stance on the firm. DBS Group Holdings Ltd is a Singapore-based banking and financial services corporation, that currently has a $58.6 billion market capitalization. DBSDY delivered a 20.54% return since the beginning of the year, extending its 12-month returns to 53.35%. The stock closed at $90.57 per share on August 04, 2021.
Here is what Fiduciary Management has to say about DBS Group Holdings Ltd in its Q2 2021 investor letter:
“We also initiated a new position in DBS Group Holdings Ltd., the largest bank in Singapore. The CEO, Piyush Gupta, is regarded as one of the best banking CEOs in Asia and is known for investing early and aggressively in technology capabilities, which we consider a competitive advantage. The bank has an attractive runway for growth in the region (double‐digit earnings per share compound annual growth rate over the last decade) and has earned multiple awards and accolades, including “World’s Best Bank” and “Safest Bank in Asia.” We view the business as a high‐quality franchise with a conservative underwriting culture, that is trading at an undemanding valuation.”
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Based on our calculations, DBS Group Holdings Ltd (NYSE: DBSDY) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. DBS Group Holdings Ltd (NYSE: DBSDY) delivered a 3.01% 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.