Baron Funds, an investment management company, released its “Baron Small Cap Fund” third-quarter 2024 investor letter. A copy of the letter can be downloaded here. The fund returned 9.68% (Institutional Shares) in the quarter outperforming the Russell 2000 Growth Index’s 8.41% return and the broader Russell 3000 Index’s 6.23% return. For the first nine months of 2024, the Fund is up 14.74% compared to 13.22% and 20.63% returns for the indexes. In contrast to the narrow market leadership of previous periods, the market rally during the quarter saw strong performance across a broad range of sectors and market capitalization. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Baron Small Cap Fund highlighted stocks like Endava plc (NYSE:DAVA), in the third quarter 2024 investor letter. Endava plc (NYSE:DAVA) is a technology services provider for clients in the consumer products, healthcare, mobility, and retail verticals. The one-month return of Endava plc (NYSE:DAVA) was 7.00%, and its shares lost 59.26% of their value over the last 52 weeks. On November 20, 2024, Endava plc (NYSE:DAVA) stock closed at $26.74 per share with a market capitalization of $1.59 billion.
Baron Small Cap Fund stated the following regarding Endava plc (NYSE:DAVA) in its Q3 2024 investor letter:
“We sold Endava plc (NYSE:DAVA) as IT services demand has slowed due to macroeconomic uncertainty, overspending during the pandemic, and as customers evaluate recent advancements in generative AI. Endava’s results have been worse than its peers’ due to less diversified end-market exposure and pullbacks from a few large customers. Given low visibility into a rebound in sales and margins, we decided to exit the investment.”
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Endava plc (NYSE:DAVA) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 12 hedge fund portfolios held Endava plc (NYSE:DAVA) at the end of the third quarter which was 16 in the previous quarter. In the September quarter, Endava’s revenue totaled GBP195.1 million compared to GBP188.4 million in the same period in the prior year. While we acknowledge the potential of Endava plc (NYSE:DAVA) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed Endava plc (NYSE:DAVA) and shared White Falcon Capital Management’s views on the company. In addition, please check out our hedge fund investor letters Q3 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.