Baron Discovery Fund recently published its third-quarter commentary – a copy of which can be downloaded here. During the third quarter of 2020, the Baron Discovery Fund returned 18.83% (institutional shares). This was 11.67% better than the Russell 2000 Growth Index, the Fund’s primary benchmark index. You should check out Baron Discovery Fund’s top 5 stock picks for investors to buy right now, which could be the biggest winners of 2021.
In the Q3 2020 Investor Letter, Baron Discovery Fund highlighted a few stocks and Purple Innovation Inc. (NASDAQ:PRPL) is one of them. Purple Innovation Inc. (NASDAQ:PRPL) engages in the design and manufacture of comfort technology products. Year-to-date, Purple Innovation Inc. (NASDAQ:PRPL) stock gained 241.6% and on December 2nd it had a closing price of $29.75. Here is what Baron Discovery Fund said:
“Our largest purchase during the quarter was Purple Innovation, Inc. Purple was founded by the Pearce brothers, rocket scientist Tony, and comfort technology engineer Terry. The Pearce brothers first created a product called Floam, the world’s lightest-weight cushioning fluid that was used in medical beds, footwear, braces, and other applications. By 2013, they had one-upped Floam by patenting a durable hyper-elastic polymer which eventually would be molded into the mattress cushioning that forms the core of the mattresses that Purple sells today. Purple has been led by what we call a “founder-like CEO” in Joe Megibow, who joined the company from Expedia in 2018. Under Joe’s leadership, we believe the company is rapidly expanding its manufacturing capacity in order to meet current demand. We also believe there are untapped growth opportunities, such as selling into international markets and expanding the technology into more customized seat cushions (such as commercial airline seat cushions) that will, over time, allow for additional growth verticals. We believe the company can get to $1.0 billion in revenue over the next three years with a mid-teens profit margin. As such, we think shares will be worth approximately twice what they are today in that time frame.”
In Q2 2020, the number of bullish hedge fund positions on Purple Innovation Inc. (NASDAQ:PRPL) stock increased by about 100% from the previous quarter (see the chart here), so a number of other hedge fund managers believe in Purple Innovation’s growth potential. Our calculations showed that Purple Innovation Inc. (NASDAQ:PRPL) isn’t ranked among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 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. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
Video: Top 5 Stocks Among Hedge Funds
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Disclosure: None. This article is originally published at Insider Monkey.