Baron Funds, an investment management company, released its “Baron Real Estate Fund” fourth quarter 2023 investor letter. A copy of the same can be downloaded here. The fund had a strong performance in 2023 and generated a gain of 25.04% (Institutional Shares). This is more than double the MSCI US REIT Index (the REIT Index), which rose 12.27% and also outperformed the MSCI USA IMI Extended Real Estate Index’s 23.09% return. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Baron Real Estate Fund featured stocks such as NVR, Inc. (NYSE:NVR) in the fourth quarter 2023 investor letter. Headquartered in Reston, Virginia, NVR, Inc. (NYSE:NVR) is a home builder. On January 22, 2024, NVR, Inc. (NYSE:NVR) stock closed at $7,416.01 per share. One-month return of NVR, Inc. (NYSE:NVR) was 5.82%, and its shares gained 47.17% of their value over the last 52 weeks. NVR, Inc. (NYSE:NVR) has a market capitalization of $23.576 billion.
Baron Real Estate Fund stated the following regarding NVR, Inc. (NYSE:NVR) in its fourth quarter 2023 investor letter:
“In our June 30, 2023, shareholder letter, we introduced our view that we believe there is a compelling case for a favorable paradigm shift in how homebuilding companies are valued in the public markets.
NVR, Inc. (NYSE:NVR), a well-managed and highly regarded homebuilder that adopted a 100% land-light strategy several years ago, has seen its valuation P/E multiple expand to 16 times earnings per share while the valuation of the other public homebuilders remains in the historical P/E range of 5 to 10 times earnings per share. Now that several homebuilders are in the process of pivoting to a more land-light strategy, their valuations have the potential to improve over time.
In the second quarter of 2023, legendary investor Warren Buffett’s Berkshire Hathaway Inc. invested $800 million in three U.S. homebuilders (DR Horton, Lennar, and NVR) despite the dramatic increase in homebuilder share prices and mortgage rates in the trailing 12-month period. We suspect Berkshire Hathaway has taken notice of the operating prowess of several U.S. homebuilders and believes that valuations are compelling.”
A builder wearing a hard hat admiring a newly constructed smart home.
NVR, Inc. (NYSE:NVR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 35 hedge fund portfolios held NVR, Inc. (NYSE:NVR) at the end of third quarter which was 41 in the previous quarter.
We discussed NVR, Inc. (NYSE:NVR) in another article and shared the list of most profitable real estate stocks. In addition, please check out our hedge fund investor letters Q4 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.
