ClearBridge Investments, an investment management firm, published its “International Growth ADR Strategy” first quarter 2021 investor letter – a copy of which can be downloaded here. The ClearBridge International Growth ADR Strategy underperformed the benchmark MSCI EAFE Index for the first quarter. The Strategy sustained losses across seven of the nine sectors in which it was invested (out of 11 total), with the IT and financials sectors the primary detractors. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.
ClearBridge Investments, in its Q1 2021 investor letter, mentioned Sociedad Química y Minera de Chile S.A. (NYSE: SQM), and shared their insights on the company. Sociedad Química y Minera de Chile S.A. is a Santiago, Chile-based chemicals company that currently has a $12.3 billion market capitalization. Since the beginning of the year, SQM delivered a -3.97% return, while its 12-month gains are up by 72.99%. As of June 15, 2021, the stock closed at $46.80 per share.
Here is what ClearBridge Investments has to say about Sociedad Química y Minera de Chile S.A. in its Q1 2021 investor letter:
"Among materials names in our structural bucket, we sold SQM as the stock hit our price target. Lithium prices remain at levels well below previous highs and while we expect they may reach higher levels in the future; high pricing likely encourages additional supply onto the market."
Our calculations show that Sociedad Química y Minera de Chile S.A. (NYSE: SQM) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the first quarter of 2021, Sociedad Química y Minera de Chile S.A. was in 16 hedge fund portfolios, compared to 14 funds in the fourth quarter of 2020. SQM delivered a -14.88% 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.