Baron Funds, an asset management company, released its “Baron Real Estate Fund” second quarter 2022 investor letter. A copy of the same can be downloaded here. Baron Real Estate Fund (the “Fund”) declined 20.62% (Institutional Shares) in the second quarter of 2022, underperforming its primary benchmark, the MSCI USA IMI Extended Real Estate Index (the “MSCI Real Estate Index”), which declined 17.12%. The Fund underperformed the MSCI US REIT Index (the “REIT Index”), which declined 17.16%. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.
In its Q2 2022 investor letter, Baron Real Estate Fund mentioned Lennar Corporation (NYSE:LEN) and explained its insights for the company. Founded in 1954, Lennar Corporation (NYSE:LEN) is a Miami, Florida-based home construction company with a $20.8 billion market capitalization. Lennar Corporation (NYSE:LEN) delivered a -36.78% return since the beginning of the year, while its 12-month returns are down by -25.40%. The stock closed at $73.44 per share on September 14, 2022.
Here is what Baron Real Estate Fund has to say about Lennar Corporation (NYSE:LEN) in its Q2 2022 investor letter:
“In the first quarter of 2022, we lowered the Fund’s exposure to certain residential-related real estate companies (homebuilders, building products/ services companies, and home centers) from 23.5% of the Fund’s net assets at year-end 2021 to only 11.7% on March 31, 2022. At that time, we cut the Fund’s residential-related exposure because many shares had appreciated significantly the last few years and were vulnerable to the possibility of an eventual temporary slowdown in housing-related purchase activity due to a combination of consumer affordability concerns driven by the sharp rise in home prices and higher mortgage rates, and a dearth of new housing inventory.
Recent commentary from homebuilder executives illuminates the concerns we had at the beginning of 2022. Stuart Miller, Executive Chairman of Lennar Corporation (NYSE:LEN), said the following on June 21, 2022:
“The weight of a rapid doubling of interest rates over six months, together with accelerated price appreciation, began to drive buyers in many markets to pause and reconsider. We began to see these effects after quarter end.”
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Our calculations show that Lennar Corporation (NYSE:LEN) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Lennar Corporation (NYSE:LEN) was in 47 hedge fund portfolios at the end of the second quarter of 2022, compared to 50 funds in the previous quarter. Lennar Corporation (NYSE:LEN) delivered a 6.48% return in the past 3 months. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q2 page.
Disclosure: None. This article is originally published at Insider Monkey.
