Is the Sony Group (SONY) an excellent investment choice?
Cooper Investors, an investment management firm, has released its “Cooper Investors Global Equities Fund (Hedged)” letter to investors for the second quarter of 2021 – a copy of which can be downloaded here. For the 3 months and 12 months ended June 30, the Fund returned 7.97% and 32.87% respectively, while its benchmark, in comparison, posted 7.05% and 35.32% on the same period. You can check out the top 5 holdings of the fund to get an idea of their top bets for 2021.
In Cooper Investors’ Q2 2021 letter to investors, the fund mentioned Sony Group Corporation (NYSE: SONY) and discussed its position on the company. Sony Group Corporation is a Minato City, Tokyo, JapanMultinational based conglomerate, which currently has a market capitalization of $ 128.7 billion. SONY has returned 1.50% year-to-date, extending its 12-month returns to 28.23%. The stock closed at $ 102.62 per share on August 6, 2021.
Here’s what Cooper Investors has to say about Sony Group Corporation in its Q2 2021 letter to investors:
“First of all gaming, an area that was already growing in global importance before the pandemic but whose development has only accelerated, the size of the American video game industry eclipsing films and music combined in 2020. The portfolio is exposed to this area through investments in Sony (Sony Interactive, producer of consoles and PlayStation games). The first half of 2021 saw transaction activity reach record levels, around US $ 60 billion combining both mergers and acquisitions and public offerings. While some owners of giant ecosystems like Microsoft have made big bets (for example, the $ 7.5 billion deal for Zenimax in March), we prefer Sony’s cautious approach of taking several smaller investments but more strategic. Examples include the additional US $ 200 million stake in Epic Games (creator of the Unreal Engine and Fortnite) in March of this year, or the recent purchase of Finland’s oldest video game studio, Housemarque. The latter case represents a good example of Sony being both a “safe haven” and a source of scale and support for small but proven studios to maintain their culture and become potential developers of triple-A games over time. time.”
Based on our calculations, Sony Group Corporation (NYSE: SONY) was not able to land a spot on our list of the 30 most popular stocks among hedge funds. SONY was in 27 hedge fund portfolios at the end of the first quarter of 2021, compared to 28 funds in the fourth quarter of 2020. Sony Group Corporation (NYSE: SONY) has generated a return of 5.75% in the last 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.