Baron Funds, an asset management firm, published its “Baron Durable Advantage Fund” first quarter 2022 investor letter – a copy of which can be downloaded here. Baron Durable Advantage Fund (the “Fund”) declined 10.3% (Institutional Shares) during the first quarter, compared to the 4.6% decline for the S&P 500 Index (the “Index”), the Fund’s benchmark. Try to spend some time looking at the fund’s top 5 holdings to be informed about their best picks for 2022.
In its Q1 2022 investor letter, Baron Durable Advantage Fund mentioned Intuit Inc. (NASDAQ:INTU) and explained its insights for the company. Founded in 1983, Intuit Inc. (NASDAQ:INTU) is a Mountain View, California-based business software company with a $101.6 billion market capitalization. Intuit Inc. (NASDAQ:INTU) delivered a -44.10% return since the beginning of the year, while its 12-month returns are down by -14.26%. The stock closed at $359.59 per share on May 16, 2022.
Here is what Baron Durable Advantage Fund has to say about Intuit Inc. (NASDAQ:INTU) in its Q1 2022 investor letter:
“At the company-specific level, with 59% of our holdings posting double-digit declines during the quarter, we had no chance to hold up against the Index that was down less than 5%. The good news is that for the most part, this draw-down did not result in a permanent loss of capital and in many cases, we believe fundamentals have remained robust or improved even though stock prices declined. One example is Intuit (NASDAQ:INTU), the leading provider of accounting software, and our second largest detractor in the quarter. The stock lost 25% of its value (or over $45 billion) due to a miss in quarterly revenues, which was driven by a slower start to the tax season, leading the company to miss consensus estimates for consumer revenues by about $190 million. The slower start to the tax season is of course insignificant to the intrinsic value of the business, as everyone knows there are only two certainties in life and one of them is – TAXES! And so, naturally, Intuit reaffirmed its annual projections. Moreover, results in other segments were ahead of expectations. CEO Sasan Goodarzi explained the outperformance during its quarterly conference call by saying:
‘We have a nearly $300 billion addressable market driven by tailwinds that include a shift to virtual solutions, an acceleration to online and omni-channel capabilities, and digital money offerings. This, combined with the team’s excellence and execution is contributing to the strength of our performance.’
More specifically, Intuit is gaining market share in tax filings (“we are on track to gain share overall again this season”), continues expanding its QuickBooks online offering, which was up 35% year-over-year, and is seeing strong synergies from its Credit Karma acquisition, driven by Intuit’s Lightbox technology, which allows better personalization of offerings to customers (for example, it “doubles the average approval rate for members who apply for credit cards on Credit Karma versus outside of Credit Karma”). The bottom line is that our estimates of Intuit’s intrinsic value were up while the stock price was down and therefore our future expected return has increased.”
Our calculations show that Intuit Inc. (NASDAQ:INTU) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Intuit Inc. (NASDAQ:INTU) was in 82 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 64 funds in the previous quarter. Intuit Inc. (NASDAQ:INTU) delivered a -32.03% return in the past 3 months.
In March 2022, we also shared another hedge fund’s views on Intuit Inc. (NASDAQ:INTU) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.
Disclosure: None. This article is originally published at Insider Monkey.
