Here’s What Tempted Baron Funds to Dispose its Stitch Fix (SFIX) Position

Baron Funds, an asset management firm, published its “Baron Asset Fund” fourth quarter 2021 investor letter – a copy of which can be downloaded here. Against this backdrop, Baron Asset Fund (the “Fund”) gained 5.04% (Institutional Shares), while the Russell Midcap Growth Index (the “Index”) gained 2.85%, and the S&P 500 Index gained 11.03%. The Fund’s outperformance was attributable to favorable stock selection and tailwinds from certain style biases, notably its underexposure to the poor performing residual volatility and beta factors. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.

Baron Asset Fund, in its Q4 2021 investor letter, mentioned Stitch Fix, Inc. (NASDAQ: SFIX) and discussed its stance on the firm. Stitch Fix, Inc. is a San Francisco, California-based online personal styling service with a $1.8 billion market capitalization. SFIX delivered a -12.26% return since the beginning of the year, while its 12-month returns are down by -77.53%. The stock closed at $16.60 per share on January 17, 2022.

Here is what Baron Asset Fund has to say about Stitch Fix, Inc. in its Q4 2021 investor letter:

“Shares of Stitch Fix, Inc., an online apparel retailer, fell after management meaningfully reduced its 2022 revenue growth projection. Previously a subscription-like business model, Stitch Fix is pivoting to enable consumers to directly purchase clothing that its site recommends. These changes were more disruptive than we had anticipated, causing a drop in customer engagement and the surprise exit of its newly hired Chief Product Officer. We lost confidence in management’s ability to execute on its strategy and exited our position.”

Our calculations show that Stitch Fix, Inc. (NASDAQ: SFIX) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. SFIX was in 30 hedge fund portfolios at the end of the third quarter of 2021, compared to 35 funds in the previous quarter. Stitch Fix, Inc. (NASDAQ: SFIX) delivered a -50.67% return in the past 3 months.

In November 2021, we also shared another hedge fund’s views on SFIX in another article. You can find other letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.

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