Baron Funds: “We Believe Mercury Systems (MRCY) Can Grow for Many Years at a Mid-Teens Rate”

Baron Funds, an asset management firm, published its “Baron Discovery Fund” third quarter 2021 investor letter – a copy of which can be downloaded here. A decline of 5.02% was delivered by the fund’s institutional shares for the third quarter of 2021, which was 0.63% better than the Russell 2000 Growth Index (the “Benchmark”). You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.

Baron Discovery Fund, in its Q3 2021 investor letter, mentioned Mercury Systems, Inc. (NASDAQ: MRCY) and discussed its stance on the firm. Mercury Systems, Inc. is an Andover, Massachusetts-based aerospace and defense company with a $3 billion market capitalization. MRCY delivered a -40.77% return since the beginning of the year, while its 12-month returns are down by -24.04%. The stock closed at $52.16 per share on November 16, 2021.

Here is what Baron Funds has to say about indie Mercury Systems, Inc. in its Q3 2021 investor letter:

“Mercury Systems, Inc., a provider of defense electronics solutions, was a detractor from performance in the quarter. In early August, the company announced earnings that beat consensus but took down full-year 2021 guidance due to some program delays on ship-based radar, fighter jet electronics, missile defense systems, and foreign military sales. Management indicated that it expected some carryover into fiscal 2022 but with a strong rebound in the back half of 2022 into 2023. Given strong bi-partisan support for a military budget proposal, and the positioning of Mercury to counter the most important threats from Russia and China, we believe that Mercury will see organic reacceleration in mid-2022 and 2023. In addition, the company has been setting up its infrastructure for an even greater acquisition cadence. All in, we believe that the company can grow for many years at a mid-teens rate. At current share prices, we believe that Mercury offers significant upside potential.”

Photo by Yogesh Phuyal on Unsplash

Based on our calculations, Mercury Systems, Inc. (NASDAQ: MRCY) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. MRCY was in 11 hedge fund portfolios at the end of the first half of 2021, compared to 17 funds in the previous quarter. Mercury Systems, Inc. (NASDAQ: MRCY) delivered a 0.64% return in the past 3 months.

Disclosure: None. This article is originally published at Insider Monkey.