Baron Funds, an investment management company, released its “Baron Real Estate Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. In Q1 2025, stocks were sold due to economic growth slowdown, inflation, and policymaking issues, including Baron Real Estate Fund®, without considering value. The fund declined 6.69% (Institutional Shares) in the quarter compared to a 3.11% decline for the MSCI USA IMI Extended Real Estate Index (the MSCI Real Estate Index) and a 0.76% gain for the MSCI US REIT Index (the REIT Index). In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its first-quarter 2025 investor letter, Baron Real Estate Fund highlighted stocks such as Equinix, Inc. (NASDAQ:EQIX). Equinix, Inc. (NASDAQ:EQIX) is a digital infrastructure company. The one-month return of Equinix, Inc. (NASDAQ:EQIX) is 8.74%, and its shares gained 7.47% of their value over the last 52 weeks. On May 14, 2025, Equinix, Inc. (NASDAQ:EQIX) stock closed at $859.21 per share with a market capitalization of $84.047 billion.
Baron Real Estate Fund stated the following regarding Equinix, Inc. (NASDAQ:EQIX) in its Q1 2025 investor letter:
“Equinix, Inc. (NASDAQ:EQIX) is the premier global carrier and cloud-neutral data center operator with 270 data centers in 74 metropolitan areas and 35 countries.
Equinix is currently valued at only 20 times 2025 estimated cash flow versus private market data center transactions that have occurred at 25 to 30 times cash flow. The shares are valued at a small premium to REITs, despite superior and more durable cash flow growth prospects.
In the most recent quarter, shares of Equinix, Inc., the premier global operator of network-dense, carrier-neutral data centers, declined following two years of robust absolute and relative performance. Underperformance was driven by discrete earnings headwinds that dampened reported growth, normalization of valuation levels, evolving concerns of customer bookings trajectory given the uncertain macroenvironment and signs of a “pause” in certain customers’ underlying new business trends (e.g. bookings for enterprise software companies).
In the most recent quarter, we reduced the Fund’s exposure to Equinix. While we remain optimistic about the company’s ability to drive outsized bottom-line earnings growth through a combination of sales growth and operating leverage flow-through, the stock enjoyed two years of superior performance and valuation levels were no longer as compelling as other investment ideas we were surfacing. We may look to revisit the sizing of our investment should valuation levels relative to growth prospects become more attractive. Equinix is a blue chip data center operator with strong pricing power and the ability to drive outsized returns on capital…” (Click here to read the full text)
A team of IT professionals working on a digital platform, indicating the company’s agile digital services.
Equinix, Inc. (NASDAQ:EQIX) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 56 hedge fund portfolios held Equinix, Inc. (NASDAQ:EQIX) at the end of the fourth quarter which was 55 in the previous quarter. While we acknowledge the potential of Equinix, Inc. (NASDAQ:EQIX) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.
In another article, we covered Equinix, Inc. (NASDAQ:EQIX) and shared the list of best REIT stocks to buy according to billionaires. In addition, please check out our hedge fund investor letters Q1 2025 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.
