Here’s what makes Upstart Holdings (UPST) a great equity investment


Alger, an investment management company, has published its letter to investors “Alger Mid Cap Focus Fund” for the third quarter of 2021 – a copy of which can be found. downloaded here. During the third quarter, the portfolio’s largest sector weightings were information technology and healthcare. The largest sector overweighting was industry. The portfolio had no exposure to the utilities or energy sectors and negligible exposure to the real estate and materials sectors. You can check out the top 5 holdings in the fund to get a feel for their top picks for 2021.

Algiers, in its letter to investors for the third quarter of 2021, mentioned Upstart Holdings, Inc. (NASDAQ: UPST) and discussed his position on the company. Upstart Holdings, Inc. is a San Mateo, California-based consumer credit company with a market capitalization of $ 26.6 billion. UPST has generated an impressive return of 193.87% year-to-date, while its 12-month returns are up sharply by 740.64%. The stock closed at $ 342.56 per share on October 22, 2021.

Here’s what Algiers has to say about Upstart Holdings, Inc. in its Q3 2021 letter to investors:

Holdings reached provides an online marketplace lending platform that is powered by artificial intelligence (AI). The platform facilitates the origination of unsecured prime and near-prime consumer loans by acting as an intermediary between consumers and lending institutions, which is a low-cap model. Upstart’s fundamental value proposition uses Al and alternative data to produce potentially high underwriting accuracy for its financial partners. Upstart differentiates its service with its Al-based models that incorporate more than 1,600 variables that they believe can more accurately quantify the risk of a loan. The system creates an automated and transparent loan product, which can generate higher approval rates and lower interest rates for customers, as well as a strong consumer credit pipeline, higher loss rates. low and reduced fraud for banking partners.

Upstart shares outperformed in the last quarter after the company said it performed well for the second quarter and raised its guidance for the year 2021. In our opinion, the results showed that the growth in volumes in the core personal loan business is strong as the Upstart marketing funnel gains scale advantages as earnings before interest, taxes, depreciation and amortization (EBITDA) margins rise and are well ahead on the forecast. Upstart also continues to gain traction in banking partnerships and to make solid progress with its nascent auto loan product which is now available in 47 states. In our opinion, the results demonstrate that Upstart has the potential to address a very large market over the next few years in a very profitable manner, and that the company’s investments in growth initiatives are paying off. “

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photo by Scott graham to Unsplash

Based on our calculations, Upstart Holdings, Inc. (NASDAQ: UPST) failed to secure a spot in our list of 30 most popular stocks among hedge funds. UPST was in 21 hedge fund portfolios at the end of the first half of 2021, compared to 13 funds in the previous quarter. Upstart Holdings, Inc. (NASDAQ: UPST) generated a return of 4.48% over 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 was originally published on Monkey initiate.

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