Right here’s Why Headwaters Capital Feels Nice About its SPS Commerce (SPSC) Place

Headwaters Capital, an funding administration agency, revealed its third-quarter 2021 investor letter – a replica of which might be downloaded right here. A quarterly portfolio web return of two.8% was recorded by the fund for the third quarter of 2021, outperforming the Russell Mid Cap Index that delivered a -0.9% return for a similar interval. You may check out the fund’s prime 5 holdings to have an concept about their finest picks for 2021.

Headwaters Capital, in its Q3 2021 investor letter, talked about SPS Commerce, Inc. (NASDAQ: SPSC) and mentioned its stance on the agency. SPS Commerce, Inc. is a Minneapolis, Minnesota-based software program firm with a $5.7 billion market capitalization. SPSC delivered a 46.85% return because the starting of the yr, whereas its 12-month returns are up by 85.68%. The inventory closed at $159.46 per share on October 8, 2021.

Here’s what Headwaters Capital has to say about SPS Commerce, Inc. in its Q3 2021 investor letter:

“Prime Contributor: SPS Commerce (SPSC) +62% SPS Commerce is a supplier of provide chain software program known as digital information interchange (EDI) that’s utilized by suppliers of enormous retailers (Costco, Walmart, Bass Professional Outlets, and so on). SPSC’s software program helps to automate and streamline the order achievement course of for retailers and their suppliers by enabling the trade of actual time data between the 2 events, which permits for higher stock administration and extra environment friendly transport (drop-ship v. direct to retailer). SPSC is a beneficiary of the development towards omnichannel retail the place clients count on a number of order achievement choices (in-store, supply, purchase on-line choose up in retailer) and extra complicated provide chains as each tendencies require elevated collaboration between the retailer and their suppliers. Along with Q2 outcomes, SPSC raised its long-term income steerage forecast, which was nicely obtained by the market given lingering issues that clients had quickly adopted SPSC’s software program throughout COVID to allow drop-shipping. In actuality, SPSC’s software program is a sticky product that streamlines the achievement course of and will probably be more and more used all through the omnichannel retail provide chain.”


software program

Picture by Danial Igdery on Unsplash

Based mostly on our calculations, SPS Commerce, Inc. (NASDAQ: SPSC) was not capable of clinch a spot in our listing of the 30 Most In style Shares Amongst Hedge Funds. SPSC was in 20 hedge fund portfolios on the finish of the primary half of 2021. SPS Commerce, Inc. (NASDAQ: SPSC) delivered a 58.24% return up to now 3 months.

Hedge funds’ popularity as shrewd traders has been tarnished within the final decade as their hedged returns couldn’t sustain with the unhedged returns of the market indices. Our analysis has proven that hedge funds’ small-cap inventory picks managed to beat the market by double digits yearly between 1999 and 2016, however the margin of outperformance has been declining in recent times. Nonetheless, we had been nonetheless capable of establish prematurely a choose group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 share factors since March 2017 (see the small print right here). We had been additionally capable of establish prematurely a choose group of hedge fund holdings that underperformed the market by 10 share factors yearly between 2006 and 2017. Apparently the margin of underperformance of those shares has been growing in recent times. Traders who’re lengthy the market and quick these shares would have returned greater than 27% yearly between 2015 and 2017. We now have been monitoring and sharing the listing of those shares since February 2017 in our quarterly e-newsletter.

At Insider Monkey, we scour a number of sources to uncover the following nice funding concept. For instance, synthetic intelligence is without doubt one of the fastest-growing industries proper now, so we’re testing inventory pitches like this rising AI inventory. We undergo lists like the ten finest hydrogen gas cell shares to choose the following Tesla that may ship a 10x return. Regardless that we advocate positions in solely a tiny fraction of the businesses we analyze, we try as many shares as we will. We learn hedge fund investor letters and take heed to inventory pitches at hedge fund conferences. You may subscribe to our free day by day e-newsletter on our homepage.

Disclosure: None. This text is initially revealed at Insider Monkey.

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