Baron Funds, an investment management company, released its “Baron Asset Fund” third quarter 2023 investor letter. A copy of the same can be downloaded here. The market rally that was driven by technology this year came to a halt in the third quarter. Against this backdrop, the Baron Asset Fund declined 4.42% (Institutional Shares) in the third quarter outperforming the Russell Midcap Growth Index’s -5.22% return. Positive stock selection and tailwinds from its style biases drove the outperformance in the quarter. The Fund’s underexposure to higher beta stocks, which performed poorly during the market reversal was another notable factor. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Baron Asset Fund highlighted stocks like On Holding AG (NYSE:ONON) in the third quarter 2023 investor letter. Headquartered in Zurich, Switzerland, On Holding AG (NYSE:ONON) distributes athletic footwear, apparel, and accessories. On November 10, 2023, On Holding AG (NYSE:ONON) stock closed at $26.90 per share. One-month return of On Holding AG (NYSE:ONON) was 13.65%, and its shares gained 37.39% of their value over the last 52 weeks. On Holding AG (NYSE:ONON) has a market capitalization of $8.554 billion.
Baron Asset Fund made the following comment about On Holding AG (NYSE:ONON) in its Q3 2023 investor letter:
“In the third quarter, we purchased shares of On Holding AG (NYSE:ONON), a developer and distributor of athletic footwear, apparel, and accessories. On is one of the fastest-growing scaled athletic sports companies in the world. Management’s vision is to build a premium global sportswear brand based on innovation, design, and sustainability. Its products are sold through approximately 10,000 premium retail stores, which account for 65% of revenue. The balance of sales occur through its direct-to-consumer channel, encompassing its own branded and operated stores, as well as its website.
On was founded in Switzerland, but it has expanded quickly across the globe. Its products have exhibited sales momentum in the U.S., Europe, and Asia. The company is rapidly growing its base of roughly 10 flagship retail stores, and it plans to end this year with 47 stores across 18 cities in China. Roughly half of its revenue is generated in North America, 45% in Europe, and 5% in Asia Pacific. On is addressing a large market opportunity: the $355 billion global sportswear industry. This market has seen its growth driven by continued trends toward athleisure. Consumers continue to pivot their spending towards more comfortable and casual attire as they lead healthier, more active lifestyles.
We believe On should be able to grow its revenues faster than 20% for many years, while also expanding its margins. We expect its growth to be driven by expanding brand awareness leading to market share gains in its core running shoe category, particularly as On expands its geographic footprint. We expect the company to continue to reinvest into its business at high rates of return. We believe On has a large opportunity to take market share in newer shoe categories, such as tennis (Roger Federer is an investor and advisor), training, and outdoor. The company also has a significant opportunity to grow its offerings in the apparel category.”
A team of athletes showcasing the company’s athletic footwear in an outdoor stadium.
On Holding AG (NYSE:ONON) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 32 hedge fund portfolios held On Holding AG (NYSE:ONON) at the end of second quarter which was 22 in the previous quarter.
We discussed On Holding AG (NYSE:ONON) in another article and shared Bill Gates’ investment philosophy, returns and outlook on AI technology. In addition, please check out our hedge fund investor letters Q3 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.
