Baron Funds, an investment management company, released its “Baron FinTech Fund” second quarter 2024 investor letter. A copy of the letter can be downloaded here. In the second quarter, the fund declined 2.25% (Institutional Shares) compared to a (5.78)% return for the FactSet Global FinTech Index (Benchmark) and a 4.28% gain for the S&P 500 index. US equities rose with major market indices reaching all-time highs during the second quarter. Overwhelming corporate results were accompanied by mixed economic data that points to further moderation of inflation. However, the rally was concentrated and driven by mega-cap technology companies. The fund’s smaller market cap profile and lack of exposure to the Magnificent Seven led the fund to underperform the broader market. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Baron FinTech Fund highlighted stocks like KKR & Co. Inc. (NYSE:KKR) in the second quarter 2024 investor letter. KKR & Co. Inc. (NYSE:KKR) is an equity and real estate investment firm. The one-month return of KKR & Co. Inc. (NYSE:KKR) was -3.41%, and its shares gained 86.42% of their value over the last 52 weeks. On August 12, 2024, KKR & Co. Inc. (NYSE:KKR) stock closed at $112.69 per share with a market capitalization of $104.989 billion.
Baron FinTech Fund stated the following regarding KKR & Co. Inc. (NYSE:KKR) in its Q2 2024 investor letter:
“We initiated a position in KKR & Co. Inc. (NYSE:KKR), one of the largest alternative asset managers in the world with $578 billion of assets under management (AUM). We believe alternative asset management is one of the best secular growth areas of financial services, and KKR should be a prime beneficiary. Global alternatives AUM totaled $16.3 trillion at the end of 2023 and grew at an 11% CAGR since 2010, according to Preqin. Annual industry growth is expected to exceed 8% over the next five years with private equity (PE), venture capital, and private credit expected to grow at double-digit annual rates.
Founded in 1976 as one of the earliest leveraged buyout firms, KKR was led for decades by co-founders Henry Kravis and George Roberts. Since going public in 2010 as a pure-play PE firm, KKR has successfully diversified into other private asset classes, including private credit, real estate, and infrastructure investing. AUM has risen nearly 10-fold since 2010 (an 18% CAGR), and PE’s share of firm AUM has shrunk to less than one-third. These non-PE asset classes are less penetrated than PE and provide a substantial runway for KKR to continue growing its funds, fees, and earnings. KKR also has significant growth opportunities in Asia. The firm entered the Asian market in 2005 and has a scaled presence with 570 employees in a region where alternative asset management is far less penetrated compared to Western countries. In 2021, KKR successfully transitioned leadership from Kravis and Roberts to co-CEOs Scott Nuttall and Joe Bae, longtime KKR employees responsible for many of the growth initiatives that are driving KKR’s success today…” (Click here to read the full text)
A modern looking financial adviser sitting in front of a trading monitor, gesturing to a group of investors.
KKR & Co. Inc. (NYSE:KKR) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 87 hedge fund portfolios held KKR & Co. Inc. (NYSE:KKR) at the end of the first quarter which was 68 in the previous quarter. While we acknowledge the potential of KKR & Co. Inc. (NYSE:KKR) 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 cheapest AI stock.
In another article, we discussed KKR & Co. Inc. (NYSE:KKR) and shared the list of best financial stocks to buy according to hedge funds. In addition, please check out our hedge fund investor letters Q2 2024 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.
