Is EPAM Systems (EPAM) an excellent investment choice?
Harding Loevner, an investment management firm, has released its Q2 2021 Emerging Markets Equity Fund letter to investors – a copy of which can be downloaded here. A 5.62% return was recorded by the fund for the second quarter of 2021, higher than the 5.12% return of the MSCI Emerging Markets Index for the same period. You can view the top 5 holdings of the fund to get an overview of their best bets for 2021. You can view the top 5 holdings of the fund to get an idea of their best bets for 2021.
In Harding Loevner’s Q2 2021 letter to investors, the fund mentioned EPAM Systems Inc. (NYSE: EPAM) and discussed its position on the company. EPAM Systems Inc. is a Newtown, Pennsylvania-based software engineering company with a market capitalization of $ 35.1 billion. EPAM has returned 75.20% year-to-date, while its 12-month returns are up 94.41%. The stock closed at $ 629.53 per share on September 23, 2021.
Here’s what Harding Loevner has to say about EPAM Systems Inc. in his Q2 2021 letter to investors:
“By sector, good stocks in Information Technology (IT) and Consumer Staples contributed significantly, offset by weaker results in Financials and Consumer Discretionary. EPAM, the software engineering company focused on Eastern Europe (but listed in the United States), continued to benefit from the acceleration in demand for digital transformation projects and the consolidation by customers of their technology service providers. “
Photo by Danial Igdery on Unsplash
Based on our calculations, EPAM Systems Inc. (NYSE: EPAM) was unable to land a spot on our list of the 30 most popular stocks among hedge funds. EPAM was in 33 hedge fund portfolios at the end of the first half of 2021, compared to 24 funds in the previous quarter. EPAM Systems Inc. (NYSE: EPAM) has generated a return of 19.93% 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.