Here’s why Polen Capital sold its loan tree position (TREE)

Polen Capital, an investment management firm, has released its first quarter 2021 Polen US SMID Company Growth Composite letter to investors – a copy of which can be downloaded here. The fund returned 2.35% for the first quarter of 2021, behind its benchmark Russell 2500 Growth which gained 2.49% for the same period. You can take a look at the top 5 holdings of the fund to get an overview of their top bets for 2021.

Polen Capital, in its letter to investors for the first quarter of 2021, mentioned Lending Tree (NASDAQ: TREE) and shared its views on the company. Lending Tree is an online lending marketplace based in Charlotte, North Carolina, which currently has a market capitalization of $ 2.7 billion. Year-to-date, TREE has achieved a return of -25.38%, while its 12-month returns are down -24.16%. As of May 26, 2021, the stock closed at $ 204.31 per share.

Here’s what Polen Capital has to say about Lending Tree in its Q1 2021 letter to investors:

“We also sold our position in LendingTree. LendingTree is a two-way marketplace in the consumer financial services vertical industry that connects borrowers to lenders. The company has built a brand over more than 15 years that offers savings to borrowers by putting banks in competition. the company had been acquired by IAC before the financial crisis, then was created at the height of the global financial crisis (GFC). The company experienced a resurgence after the GFC adding value to the mortgage market. The company has used the strong generation cash flow in the model to expand to adjacencies and diversify the revenue base. The product offering has grown over the years primarily through acquisitions and includes cards credit, personal loans and insurance.

This diversified strategy had paid off amid demand shocks, such as the drop in demand for mortgages 18 months ago and then the destruction of demand caused by the pandemic. However, diversification has some drawbacks. While this protects the company from major shocks of demand destruction, in our opinion, it made it difficult to achieve a consistent long-term mix, as products came in and out of favor due to macroeconomic factors. . While we believe LendingTree has solved a unique issue, we do not believe it has the same cumulative potential in the future and we have exited the position as per our process. “

Cash

Our calculations show that Lending Tree (NASDAQ: TREE) does not make our list of the 30 most popular stocks among hedge funds. At the end of the first quarter of 2021, Lending Tree was in 25 hedge fund portfolios, compared to 26 fund in the fourth quarter of 2020. TREE has generated a return of -26.80% in the last 3 months.

The 10 largest stocks among hedge funds returned 231.2% between 2015 and 2020 and outperformed S&P 500 Index ETFs by more than 126 percentage points. We know it sounds amazing. You rejected our articles on major hedge fund stocks mainly because other media provided you with biased information about poor performance of hedge funds. You could have doubled the size of your nest egg by investing in the best hedge fund stocks instead of stupid S&P 500 ETFs. Here you can watch our video on the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

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Disclosure: none. This article originally appeared on Insider Monkey.

About Jermaine Chase

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