Baron Funds, an asset management firm, published its “Baron Small Cap Fund” first quarter 2022 investor letter – a copy of which can be downloaded here. Baron Small Cap Fund (the “Fund”) did poorly in the first quarter, on both an absolute and relative basis. The Fund was down 15.68% (Institutional Shares), trailing the Russell 2000 Growth Index, which lost 12.63%, and the S&P 500 Index, which fell 4.60%. The Fund’s longer-term performance is still admirable gaining 10.76% per year, on an annualized basis, over its almost 25-year history and besting the returns of its benchmark index for all relevant time periods. Try to spend some time looking at the fund’s top 5 holdings to be informed about their best picks for 2022.
In its Q1 2022 investor letter, Baron Small Cap Fund mentioned Mercury Systems, Inc. (NASDAQ:MRCY) and explained its insights for the company. Founded in 1981, Mercury Systems, Inc. (NASDAQ:MRCY) is an Andover, Massachusetts-based aerospace and defense company with a $3.4 billion market capitalization. Mercury Systems, Inc. (NASDAQ:MRCY) delivered a 7.19% return since the beginning of the year, while its 12-month returns are down by -7.08%. The stock closed at $59.02 per share on May 19, 2022.
Here is what Baron Small Cap Fund has to say about Mercury Systems, Inc. (NASDAQ:MRCY) in its Q1 2022 investor letter:
“Mercury Systems, Inc. (NASDAQ:MRCY), a leading Tier 2 defense electronics contractor, bounced back, along with the broader defense industry, after the Russian invasion of Ukraine and a larger-than-expected U.S. defense budget for fiscal 2023. As Mercury is involved in all the key priorities of the current U.S. defense strategy, we believe that growth will accelerate in the future. Mercury has been struggling with program delays and supply-chain issues for much of the last year, and the stock has been under pressure for some time. Activists bought stakes recently, which we view as an indication of value in the stock. We are hopeful that the company will revert to its historic growth algorithm or high single-digit organic revenue growth, faster profit growth, and strategic and accretive acquisitions, which would drive much higher EBITDA and a higher valuation, in line with past norms.”
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Our calculations show that Mercury Systems, Inc. (NASDAQ:MRCY) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Mercury Systems, Inc. (NASDAQ:MRCY) was in 15 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 21 funds in the previous quarter. Mercury Systems, Inc. (NASDAQ:MRCY) delivered a 11.48% return in the past 3 months.
In November 2021, we also shared another hedge fund’s views on Mercury Systems, Inc. (NASDAQ:MRCY) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.
Disclosure: None. This article is originally published at Insider Monkey.
