Baron Funds, an investment management company, released its “Baron Real Estate Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. In Q1 2025, stocks were sold due to economic growth slowdown, inflation, and policymaking issues, including Baron Real Estate Fund®, without considering value. The fund declined 6.69% (Institutional Shares) in the quarter compared to a 3.11% decline for the MSCI USA IMI Extended Real Estate Index (the MSCI Real Estate Index) and a 0.76% gain for the MSCI US REIT Index (the REIT Index). In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its first-quarter 2025 investor letter, Baron Real Estate Fund highlighted stocks such as Equity Residential (NYSE:EQR). Equity Residential (NYSE:EQR) is a real estate investment trust that focuses on the acquisition, development, and management of apartments. The one-month return of Equity Residential (NYSE:EQR) was 1.20%, and its shares gained 2.94% of their value over the last 52 weeks. On May 13, 2025, Equity Residential (NYSE:EQR) stock closed at $69.06 per share with a market capitalization of $27.044 billion.
Baron Real Estate Fund stated the following regarding Equity Residential (NYSE:EQR) in its Q1 2025 investor letter:
“Equity Residential (NYSE:EQR) is one of the largest U.S. apartment REITs with 80,000 high-quality apartment units concentrated in coastal markets with strong barriers to entry, compelling resident income/demographics, and high-cost home ownership. The company maintains a strong and liquid balance sheet.
It is valued at a 6.1% implied capitalization rate representing a discount to private market transactions in the high 4% to 5% capitalization range. At its public market implied valuation of only $410,000 per apartment, the shares are valued at an approximate 20% discount to private market values and a much larger discount to replacement cost.”
An exterior shot of a newly acquired apartment building, signifying the company’s acquisition of large residential properties.
Equity Residential (NYSE:EQR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 25 hedge fund portfolios held Equity Residential (NYSE:EQR) at the end of the fourth quarter which was 30 in the previous quarter. While we acknowledge the potential of Equity Residential (NYSE:EQR) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.
In another article, we covered Equity Residential (NYSE:EQR) and shared the list of best self-storage and apartment stocks to invest in. In addition, please check out our hedge fund investor letters Q1 2025 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.
