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 Vertiv Holdings Co (NYSE:VRT) and explained its insights for the company. Founded in 2016, Vertiv Holdings Co (NYSE:VRT) is a Columbus, Ohio-based data center equipment and services provider with a $4.1 billion market capitalization. Vertiv Holdings Co (NYSE:VRT) delivered a -56.03% return since the beginning of the year, while its 12-month returns are down by -53.57%. The stock closed at $10.98 per share on May 19, 2022.
Here is what Baron Small Cap Fund has to say about Vertiv Holdings Co (NYSE:VRT) in its Q1 2022 investor letter:
“Vertiv Holdings, LLC (NYSE:VRT), a global provider of critical digital infrastructure, reported a terrible quarter and very weak guidance. The stock got obliterated. For the quarter, revenues were in line, but profits were much worse than expected. And earnings guidance for 2022 was $0.70 per share versus the $1.30 per share expected. The company suffered from a severe execution misstep related to insufficient price increases against significantly higher costs from inflation and supply-chain issues. We believe that the company has addressed the issue, raising selling prices ahead of cost increases, but mispriced orders taken late last year will penalize earnings in the first half of the upcoming year. The stock traded down to about 8 times our expectations for the earnings run rate in the back half of 2022. This is less than half the trading multiple of comparable industrials. If you recall, Vertiv came public by merging into a SPAC that was led by a highly respected executive of a leading industrial company, and his involvement gives us more confidence that this situation has been righted.”
Our calculations show that Vertiv Holdings Co (NYSE:VRT) ranks 25th on our list of the 30 Most Popular Stocks Among Hedge Funds. Vertiv Holdings Co (NYSE:VRT) was in 92 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 96 funds in the previous quarter. Vertiv Holdings Co (NYSE:VRT) delivered a -46.93% return in the past 3 months.
In April 2022, we also shared another hedge fund’s views on Vertiv Holdings Co (NYSE:VRT) 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.
