Baron Funds: “We Remain Optimistic About Public Storage (PSA)’s Long-Term Prospects”

Baron Funds, an asset management company, released its “Baron Real Estate Income Fund” second quarter 2022 investor letter. A copy of the same can be downloaded here. Baron Real Estate Income Fund (the “Fund”) declined 18.43% (Institutional Shares) in the second quarter of 2022, modestly underperforming its primary benchmark, the MSCI US REIT Index (the “REIT Index”), which declined 17.16%. 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 Real Estate Income Fund mentioned Public Storage (NYSE:PSA) and explained its insights for the company. Founded in 1972, Public Storage (NYSE:PSA) is a Glendale, California-based self-storage company with a $55.1 billion market capitalization. Public Storage (NYSE:PSA) delivered a -16.40% return since the beginning of the year, while its 12-month returns are up by 0.68%. The stock closed at $313.15 per share on September 16, 2022.

Here is what Baron Real Estate Income Fund has to say about Public Storage (NYSE:PSA) in its Q2 2022 investor letter:

“Following strong performance in the first quarter of 2022, the shares of Public Storage Incorporated, a REIT that is the world’s largest owner, operator, and developer of self-storage facilities, declined 21% in the second quarter (a similar decline to most other REITs). We remain optimistic about the company’s long-term prospects. Public Storage’s nearly 2,500 self-storage facilities across the U.S. serve more than one million customers. The company has achieved the #1 market position in 14 of its top 15 markets.

We are encouraged about the company’s prospects due to our expectations for the continuation of strong occupancy and rent trends, limited new supply, mid-teens organic cash flow growth, the potential for mergers and acquisitions activity in part due to the company’s well-capitalized and low leverage balance sheet, and the ability to increase rents monthly to combat inflation headwinds. We believe Public Storage’s shares are currently valued at a discount to private market self-storage values and offer prospects for mid-teens total returns in the next few years.”

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Our calculations show that Public Storage (NYSE:PSA) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Public Storage (NYSE:PSA) was in 33 hedge fund portfolios at the end of the second quarter of 2022, compared to 35 funds in the previous quarter. Public Storage (NYSE:PSA) delivered a 4.89% return in the past 3 months.

In July 2022, we also shared another hedge fund’s views on Public Storage (NYSE:PSA) 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.