Square Inc. (SQ), A Top Contributor for Baron FinTech’s Q4 2020 Portfolio

Baron Funds, an investment management firm, published its fourth quarter 2020 “Baron FinTech Fund” investor letter – a copy of which can be downloaded here. A return of 13.61% was recorded by its Retail Shares, and 13.67% by its Institutional Shares in the fourth quarter of 2020, both below its  FactSet Global FinTech Benchmark that delivered a 21.35% return but above its S&P 500 index that was up by 12.15% in the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Baron FinTech Fund, in their Q4 2020 investor letter, mentioned Square, Inc. (NYSE: SQ) and emphasized their views on the company. Square, Inc. is a San Francisco, California-based financial services company that currently has a $101.8 billion market capitalization. Since the beginning of the year, SQ delivered a 2.65% return, impressively extending its 12-month gains to 382.40%. As of March 22, 2021, the stock closed at $226.13 per share.

Here is what Baron FinTech Fund has to say about Square, Inc. in their Q4 2020 investor letter:

“Square, Inc. was the top contributor due to strong performance from its Cash App business and expectations for an improvement in its Seller business as consumers return to restaurants, coffee shops, and retail stores.

Square, Inc. provides point-of-sale technology to small businesses and operates the Cash App ecosystem of financial services for individuals. The stock increased after the company reported strong financial results for the most recent quarter. Cash App’s gross profit increased 212%, driven by record new users and engagement while the Seller business was resilient despite headwinds from COVID-19.We continue to own the stock due to, in our view, Square’s long runway for growth, sustainable competitive advantages, and unique corporate culture.”

Our calculations show that Square, Inc. (NYSE: SQ) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Square, Inc. was in 89 hedge fund portfolios, compared to 73 funds in the third quarter. SQ delivered a -7.96% return in the past 3 months.