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Here’s Why EPAM Systems (EPAM) Declined in Q1

Harding Loevner, an asset management company, released its “Emerging Markets Equity Strategy” first-quarter 2023 investor letter. A copy of the same can be downloaded here. In the first quarter, the strategy returned 3.3% net of fees compared to a 4.02% return for the MSCI Emerging Markets Index. The fund rose as investors weighed the global economic risks related to higher interest rates and prospects for China’s economic recovery. In addition, please check the fund’s top five holdings to know its best picks in 2023.

Harding Loevner Emerging Markets Equity Strategy highlighted stocks like EPAM Systems, Inc. (NYSE:EPAM) in the first quarter 2023 investor letter. Headquartered in Newtown, Pennsylvania, EPAM Systems, Inc. (NYSE:EPAM) is a digital platform engineering and software development services provider. On June 6, 2023, EPAM Systems, Inc. (NYSE:EPAM) stock closed at $208.77 per share. One-month return of EPAM Systems, Inc. (NYSE:EPAM) was -10.09%, and its shares lost 36.87% of their value over the last 52 weeks. EPAM Systems, Inc. (NYSE:EPAM) has a market capitalization of $12.089 billion.

Harding Loevner Emerging Markets Equity Strategy made the following comment about EPAM Systems, Inc. (NYSE:EPAM) in its Q1 2023 investor letter:

"The portfolio's returns in the roaring IT sector were hampered by software-engineering company EPAM Systems, Inc. (NYSE:EPAM) and payment-services provider Network International. EPAM signaled a more cautious outlook for growth and cost pressures related to the geographic reconfiguration of its East European engineering workforce in the wake of the war in Ukraine. UAE-based Network International indicated that challenging macroeconomic conditions in Africa may hinder near-term growth. In Communication Services, detractors included Safaricom, the leading mobile-network operator and payment-services company in Kenya, where the currency has weakened amid high inflation and a sizable current account deficit.

Buying Globant didn't increase our portfolio weight in IT services, as the purchase was funded by reducing two other industry holdings, EPAM and Tata Consultancy Services, for which valuations had become less attractive. EPAM's share price fell sharply in early 2022 after Russia invaded Ukraine, given that close to 60% of the company's staff was working in the affected countries of Russia, Ukraine, and Belarus. We were patient through this period as EPAM management restructured its workforce; only 30% are now based in these three countries. Despite the disruption, productivity remained comparable to pre-war times, and EPAM managed to retain nearly all of its customers. As a result, the stock recovered from its lows last year, offering an opportunity to trim our position."

16 Most Technologically Advanced Countries in the World in 2017
16 Most Technologically Advanced Countries in the World in 2017

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EPAM Systems, Inc. (NYSE:EPAM) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 34 hedge fund portfolios held EPAM Systems, Inc. (NYSE:EPAM) at the end of first quarter 2023 which was 35 in the previous quarter.

We discussed EPAM Systems, Inc. (NYSE:EPAM) in another article and shared Baron Funds' views on the company. In addition, please check out our hedge fund investor letters Q1 2023 page for more investor letters from hedge funds and other leading investors.

 

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Disclosure: None. This article is originally published at Insider Monkey.