Baron Funds, an asset management firm, published its “Baron Asset Fund” second quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly return of 10.03% was delivered by the fund’s institutional shares for the Q2 of 2021, compared to its Russell Midcap Growth Index and S&P 500 benchmarks that delivered 11.07% and 8.55% returns respectively for the same period. You can take a look at the fund’s top 5 holdings to have an idea about their top bets for 2021.
In the Q2 2021 investor letter of Baron Funds, the fund mentioned TransUnion (NYSE: TRU) and discussed its stance on the firm. TransUnion is a Chicago, Illinois-based consumer credit reporting agency with a $22.9 billion market capitalization. TRU delivered a 20.99% return since the beginning of the year, while its 12-month returns are up by 38.43%. The stock closed at $119.63 per share on August 27, 2021.
Here is what Baron Funds has to say about TransUnion in its Q2 2021 investor letter:
“TransUnion is a consumer credit bureau that businesses rely on to make credit and marketing decisions. Its shares increased after the company reported strong quarterly results and raised full-year guidance. After providing disappointing initial 2021 guidance during the prior quarter, these solid results and improved outlook increased investors’ confidence that the company should rebound alongside an improving economy. We continue to own the stock because we expect TransUnion to continue gaining market share in its core market, while utilizing its expertise in data aggregation and analysis to further diversify into attractive information services vertical markets.”
Based on our calculations, TransUnion (NYSE: TRU) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. TRU was in 35 hedge fund portfolios at the end of the first half of 2021, compared to 41 funds in the previous quarter. TransUnion (NYSE: TRU) delivered a 12.14% return in the past 3 months.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually 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 is originally published at Insider Monkey.
