Baron Funds, an investment management company, released its “Baron Growth Fund” second quarter 2023 investor letter. A copy of the same can be downloaded here. In the second quarter, the fund rose 2.71% (Institutional Shares) compared to the primary benchmark the Russell 2000 Growth Index’s 7.05% return and the S&P 500 Index’s 8.74% return. Year-to-date, the fund gained 10.81% trailing the Benchmark by 2.74%. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Baron Growth Fund highlighted stocks like Krispy Kreme, Inc. (NASDAQ:DNUT) in the second quarter 2023 investor letter. Headquartered in Charlotte, North Carolina, Krispy Kreme, Inc. (NASDAQ:DNUT) is an omnichannel business model that serves doughnuts and coffee. On September 5, 2023, Krispy Kreme, Inc. (NASDAQ:DNUT) stock closed at $13.24 per share. One-month return of Krispy Kreme, Inc. (NASDAQ:DNUT) was -8.06%, and its shares gained 9.78% of their value over the last 52 weeks. Krispy Kreme, Inc. (NASDAQ:DNUT) has a market capitalization of $2.227 billion.
Baron Growth Fund made the following comment about Krispy Kreme, Inc. (NASDAQ:DNUT) in its Q2 2023 investor letter:
“We continued to increase our holdings in Krispy Kreme, Inc. (NASDAQ:DNUT), an omni-channel manufacturer and retailer of doughnuts. Krispy Kreme sells its product through its owned and franchised doughnut shops, in grocery and convenience stores through its Delivered Fresh Daily (DFD) network, and via e-commerce in U.S. and non-U.S. markets. The company also owns Insomnia Cookies, a digital-first brand specializing in cookies and focused on young consumers.
Krispy Kreme is successfully executing its plan to grow fresh points of access by 10% to 15% annually. It now services over 12,000 points of access globally by leveraging 400 doughnut producing hubs worldwide. In its most recently reported quarter, the company grew revenue at 14.4% organically as it benefited from price increases and premium seasonal innovation, including strong Valentine’s and St. Patrick’s Day offerings. Krispy Kreme continued to expand its capabilities to offer specialty doughnuts across channels, with e-commerce a key beneficiary of this investment. We are encouraged by the results, with e-commerce revenue growing 23% year[1]over-year and now approaching 20% of total company sales.
In the U.S., the company expanded its footprint in traditional DFD locations while also demonstrating its ability to execute on new growth opportunities. We are particularly excited by an expanded trial at McDonald’s in the Louisville, Kentucky area. The company was able to add over 160 McDonald’s locations serviced by three local hubs with no disruption to existing locations or sales in the area.
Internationally, Krispy Kreme is on track to have a presence in up to seven new countries in 2023, with an additional three to five in 2024. The company’s total pipeline of new hubs and fresh shops from franchise partners now exceeds 1,000 shops, which will be used to unlock additional points of access over the next five years. As the company continues to execute on its international expansion plan and domestic growth opportunities like the potential McDonald’s partnership, Krispy Kreme’s ability to expand from 12,000 points of access to 75,000 points of access should drive outsized top-line and EBITDA growth.”
Krispy Kreme, Inc. (NASDAQ:DNUT) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 12 hedge fund portfolios held Krispy Kreme, Inc. (NASDAQ:DNUT) at the end of second quarter which was 10 in the previous quarter.
We discussed Krispy Kreme, Inc. (NASDAQ:DNUT) in another article and shared Baron Focused Growth Fund’s views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q2 2023 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.
