Baron Funds, an investment management company, released its “Baron FinTech Fund” second quarter 2024 investor letter. A copy of the letter can be downloaded here. In the second quarter, the fund declined 2.25% (Institutional Shares) compared to a (5.78)% return for the FactSet Global FinTech Index (Benchmark) and a 4.28% gain for the S&P 500 index. US equities rose with major market indices reaching all-time highs during the second quarter. Overwhelming corporate results were accompanied by mixed economic data that points to further moderation of inflation. However, the rally was concentrated and driven by mega-cap technology companies. The fund’s smaller market cap profile and lack of exposure to the Magnificent Seven led the fund to underperform the broader market. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Baron FinTech Fund highlighted stocks like Block, Inc. (NYSE:SQ), in the second quarter 2024 investor letter. Block, Inc. (NYSE:SQ) develops ecosystems focused on commerce and financial products and services. The one-month return of Block, Inc. (NYSE:SQ) was -9.60%, and its shares gained 2.59% of their value over the last 52 weeks. On August 9, 2024, Block, Inc. (NYSE:SQ) stock closed at $62.14 per share with a market capitalization of $38.256 billion.
Baron FinTech Fund stated the following regarding Block, Inc. (NYSE:SQ) in its Q2 2024 investor letter:
“Block, Inc. (NYSE:SQ) provides point-of-sale technology to small businesses and operates the Cash App ecosystem of financial services for individuals. Shares gave back gains from earlier this year despite reporting strong quarterly results and raising full-year guidance. In the first quarter, gross profit grew 22% and EBITDA grew 91%, both exceeding Street expectations. Given the strong start to the year, second-quarter guidance of 16% to 17% gross profit growth may have disappointed some investors. Management remains committed to a “Rule of 40” investment framework in 2026 with at least mid-teens gross profit growth and a mid-20% operating margin. We continue to own the stock due to Block’s long runway for growth, durable competitive advantages, and innovative product offering.”
A business person using a mobile point of sale device outside of a retail store.
Block, Inc. (NYSE:SQ) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 65 hedge fund portfolios held Block, Inc. (NYSE:SQ) at the end of the first quarter which was 75 in the previous quarter. Block, Inc. (NYSE:SQ) delivered a strong performance in the second quarter and the gross profit increased by 20% year over year to $2.23 billion. While we acknowledge the potential of Block, Inc. (NYSE:SQ) 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 Block, Inc. (NYSE:SQ) and shared top picks in Ark Invest’s stock portfolio. In addition, please check out our hedge fund investor letters Q2 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.
