Is FedEx (FDX) A Great Investment Pick?
East 72, an investment management firm, published its third-quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly portfolio gross return of 2.1% was recorded by the fund for the third quarter of 2021 and a +36.7% gross return over the fiscal year. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
East 72, in its Q3 2021 investor letter, mentioned FedEx Corporation (NYSE: FDX) and discussed its stance on the firm. FedEx Corporation is a Memphis, Tennessee-based transport company with a $59.4 billion market capitalization. FDX delivered a -13.82% return since the beginning of the year, while its 12-month returns are down by -20.69%. The stock closed at $223.73 per share on October 13, 2021.
Here is what East 72 has to say about FedEx Corporation in its Q3 2021 investor letter:
"It has been some considerable time that the variables which contribute to profit growth estimation have been so volatile; not just the strictly financial aspects but the impact on timing of pandemic delays, consequent labour shortages, port and shipping delays (and costs) and resultant inefficiencies in the supply chain. Christmas stock arriving in January isn’t much use – and for some unlucky folks, that will be the case.
As a good example, FedEx Q1FY22 results reported a $450million increase in “costs due to a constrained labour market which impacted labour availability, resulting in network inefficiencies, higher wage rates, and increased purchased transportation expenses. This was partially offset by higher package and freight yields, increased international export express shipments and a favourable net fuel impact”3. If all of the costs were labour related, that would be around a 6% “inefficiency” increase. No inflation, don’t forget…."
Based on our calculations, FedEx Corporation (NYSE: FDX) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. FDX was in 61 hedge fund portfolios at the end of the first half of 2021, compared to 63 funds in the previous quarter. FedEx Corporation delivered a -24.44% return in the past 3 months.