Baron Funds, an asset management firm, published its “Baron Small Cap Fund” second quarter 2022 investor letter – a copy of which can be downloaded here. Baron Small Cap Fund (the “Fund”) was down 18.60% (Institutional Shares) in the second quarter. The Fund modestly outperformed the Russell 2000 Growth Index, which was down 19.25% for the period, but lagged the S&P 500 Index, which was down 16.10%. Year-to-date, the Fund is down 31.36%, which trailed the Russell 2000 Growth Index and the S&P 500 Index, which were down 29.45% and 19.96%, respectively. Go over the fund’s top 5 positions to have a glimpse of its finest picks for 2022.
In its Q2 2022 investor letter, Baron Small Cap Fund mentioned Cognex Corporation (NASDAQ:CGNX) and explained its insights for the company. Founded in 1981, Cognex Corporation (NASDAQ:CGNX) is a Natick, Massachusetts-based system software company with a $7.8 billion market capitalization. Cognex Corporation (NASDAQ:CGNX) delivered a -41.53% return since the beginning of the year, while its 12-month returns are up by -48.25%. The stock closed at $45.47 per share on September 12, 2022.
Here is what Baron Small Cap Fund has to say about Cognex Corporation (NASDAQ:CGNX) in its Q2 2022 investor letter:
“Cognex Corporation is the market leader in machine vision products used in factory automation and logistics. The company reported a good quarter, with revenues up 18% and margins above their long-term 30% target. However, management provided cautious guidance, and the stock sold off. Growth momentum is slowing as automation projects are taking longer to deploy or being delayed by customers because of supply-chain challenges and staffing shortages.
We believe that Cognex is a unique, special company that has great growth prospects as its products are incorporated in more plants and processes across more end markets. The company has a fortress balance sheet, over $7/share in net cash, some of which was used for share repurchases in the quarter. Shares traded down to under 20 times projected earnings (though earnings are uncertain). We have owned the shares for over a decade, and the stock has appreciated over five times since our initial investment. There have been ups and downs, caused by product cycles or economic growth, but the company has always powered through, as we expect will be the case now as well.”
Photo by Danial Igdery on Unsplash
Our calculations show that Cognex Corporation (NASDAQ:CGNX) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Cognex Corporation (NASDAQ:CGNX) was in 29 hedge fund portfolios at the end of the second quarter of 2022, compared to 25 funds in the previous quarter. Cognex Corporation (NASDAQ:CGNX) delivered a 5.74% return in the past 3 months.
In September 2022, we also shared another hedge fund’s views on Cognex Corporation (NASDAQ:CGNX) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q2 page.
Disclosure: None. This article is originally published at Insider Monkey.
