Baron Funds, an asset management firm, published its “Baron Small Cap Fund” second quarter 2021 investor letter – a copy of which can be downloaded here. A return of 6.37% was delivered by the fund’s institutional shares for the Q2 of 2021, trailing the S&P 500 Index, which appreciated 8.55% and modestly outperforming the Russell 2000 Growth Index which rose 3.92% for the same period. You can take a look at the fund’s top 5 holdings to have an idea about their top bets for 2021.
In the Q2 2021 investor letter of Baron Funds, the fund mentioned Utz Brands, Inc. (NYSE: UTZ) and discussed its stance on the firm. Utz Brands, Inc. is a Pennsylvania, United States-based snack food company with a $2.6 billion market capitalization. UTZ delivered a -10.92% return since the beginning of the year, while its 12-month returns are up by 17.24%. The stock closed at $19.42 per share on August 31, 2021.
Here is what Baron Funds has to say about Utz Brands, Inc. in its Q2 2021 investor letter:
“UTZ Brands, Inc. is a salty-snack company founded in 1921, with wellknown brands such as Utz, Zapps, and Golden Flake, which went public via a SPAC in August 2020. The company had great results in 2020, somewhat helped by so many staying at home, and the stock performed well. In the first quarter of 2021, UTZ reported slower growth and some cost pressures. We remain positive on UTZ’s ability to accelerate revenue growth through innovation and enhanced marketing, and its opportunity to grow by acquisition and include other brands in its route system, and its introduction of new products. We sold some of our position in the period as the stock traded at an elevated valuation on near-term earnings but continue to see good upside in the future.”
Photo by Phillip Goldsberry on Unsplash
Based on our calculations, Utz Brands, Inc. (NYSE: UTZ) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. UTZ was in 14 hedge fund portfolios at the end of the first half of 2021, compared to 13 funds in the previous quarter. Utz Brands, Inc. (NYSE: UTZ) delivered a -17.66% return in the past 3 months.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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Disclosure: None. This article is originally published at Insider Monkey.
