Artisan Partners, a high value-added investment management firm, published its ‘Artisan Small Cap Fund’ second quarter 2021 investor letter – a copy of which can be downloaded here. A return of 4.36% was recorded by its Investor Class: ARTSX, 4.40% by its Advisor Class: APDSX, and 4.41% by its Institutional Class: APHSX for the second quarter of 2021, all above the Russell 2000® Growth Index that delivered a 3.92% return and the Russell 2000® Index that was up by 4.29% for the same period. You can take a look at the fund’s top 5 holdings to have an idea about their top bets for 2021.
In the Q2 2021 investor letter of Artisan Partners, the fund mentioned Workiva Inc. (NYSE: WK) and discussed its stance on the firm. Workiva Inc. is an Ames, Iowa-based software as a service company with a $7.5 billion market capitalization. WK delivered a 62.63% return since the beginning of the year, while its 12-month returns are up by 170.17%. The stock closed at $149.00 per share on September 3, 2021.
Here is what Artisan Partners has to say about Workiva Inc. in its Q2 2021 investor letter:
“Workiva is a global provider of cloud-based financial reporting and compliance solutions. Compiling data from disparate and unconnected systems across various departments within an organization for reporting and compliance purposes is an incredibly manual process. An evolving regulatory landscape over the past decade has not only made this increasingly burdensome, but has also required further management oversight. Workiva’s solutions aggregate this data and enable companies to have more efficiency in and greater visibility into regulatory reporting processes. In addition to this strong value proposition, we believe organizations are also on the cusp of shifting their software spend from front-office to backoffice departments, particularly in the CFO office where the shift to remote work during the pandemic highlighted the need to bring these workflows up to date. We also believe the company’s expanded product capabilities—which now go beyond its core SEC reporting capabilities—will lead to more use cases for new and existing customers, providing Workiva with a plethora of new growth opportunities in the periods ahead.”
Photo by Danial Igdery on Unsplash
Based on our calculations, Workiva Inc. (NYSE: WK) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. WK was in 21 hedge fund portfolios at the end of the first half of 2021, compared to 22 funds in the previous quarter. Workiva Inc. (NYSE: WK) delivered a 62.22% 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.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage.
Disclosure: None. This article is originally published at Insider Monkey.