Longleaf Partners Fund, an investment management firm under Southeastern Asset Management, published its “Longleaf Partners Small-Cap Fund” first quarter 2021 investor letter – a copy of which can be downloaded here. A return of 11.74% was delivered by the fund for the Q1 of 2021, slightly below its Russell 2000 benchmark that had a 12.70% gain in the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.
Longleaf Partners Small-Cap Fund, in their Q1 2021 investor letter, mentioned Realogy Holdings Corp. (NYSE: RLGY) and shared their insights on the company. Realogy Holdings Corp. is a Madison, New Jersey-based real estate and relocation services company that currently has a $1.7 billion market capitalization. Since the beginning of the year, RLGY delivered a 15.17% return, impressively extending its 12-month gains to 349.70%. As of April 22, 2021, the stock closed at $15.11 per share.
Here is what Longleaf Partners Small-Cap Fund has to say about Realogy Holdings Corp. in their Q1 2021 investor letter:
“Realogy (15%, 1.03%), the residential real-estate brokerage franchisor, was also a strong contributor. Franchise fees increased 36% year-over-year (YOY). The company generated $2.22 of FCF in the fourth quarter alone, less than 7x the stock’s price. The national single-family housing market remains very strong with big price increases helping to grow Realogy’s fees. Realogy also grew its market share, a welcome reversal from 2020 losses. Realogy’s title and mortgage sales have also increased substantially in recent months. While the company might trade in the short term with interest rate fluctuations, we believe its long-term outlook remains bright with value growth coming from FCF allocated by great management that is aligned with shareholders, and by long-term home price appreciation combined with future increasing millennial home ownership. The end of the quarter also saw Realogy’s competitor Compass come public in a somewhat disappointing IPO that still valued it at multiples of any comparable metric on which Realogy trades. We think some public company discipline for Compass leading to any attempted focus on FCF instead of revenue growth at all costs could be a good thing for Realogy.”
Our calculations show that Realogy Holdings Corp. (NYSE: RLGY) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Realogy Holdings Corp. was in 26 hedge fund portfolios, compared to 27 funds in the third quarter. RLGY delivered a -7.98% return in the past 3 months.
The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
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