Is ASGN Incorporated (ASGN) A Good Investment Choice?

Baron Funds, an asset management firm, published its “Baron Small Cap Fund” first quarter 2021 investor letter – a copy of which can be downloaded here. A return of 2.67% was delivered by the fund’s institutional shares for the Q1 of 2021, trailing the S&P 500 Index, which appreciated 6.17%, and modestly underperforming the Russell 2000 Growth Index which rose 4.88% for the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Baron Small Cap Fund, in its Q1 2021 investor letter, mentioned ASGN Incorporated (NYSE: ASGN), and shared their insights on the company. ASGN Incorporated is a Glen Allen, Virginia-based IT and professional service provider that currently has a $5.4 billion market capitalization. Since the beginning of the year, ASGN delivered a 23.07% return, extending its 12-month gains to 96.86%. As of May 14, 2021, the stock closed at $102.80 per share.

Here is what Baron Small Cap Fund has to say about ASGN Incorporated in its Q1 2021 investor letter:

ASGN Incorporated is the second largest U.S. staffing firm, with a focus on the fast growing, high-end commercial and federal IT service sectors. ASGN reported strong fourth quarter results, which exceeded estimates in revenues, margins, and earnings. Revenues declined just 1% in the quarter in a terrible employment market. The business model and operations held up sensationally, and now there are strong tailwinds for growth. Consulting services grew 19% in the past quarter and has great visibility for continued strong growth. These services are higher-margin and higher-value add and is similar to the “digitization” work done by other IT service providers (like Endava and Grid Dynamics, which we also own). As this line of business becomes more significant, the stock should command a higher multiple. Additionally, the balance sheet is now underleveraged, and we would anticipate ASGN reentering the acquisition market, which has added great value in the past.”

Our calculations show that ASGN Incorporated (NYSE: ASGN) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, ASGN Incorporated was in 14 hedge fund portfolios, compared to 21 funds in the third quarter. ASGN delivered a 10.45% return in the past 3 months.

The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about 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 is originally published at Insider Monkey.