Baron Funds, an investment management firm, released its “Focused Growth Fund” fourth quarter 2024 investor letter. A copy of the letter can be downloaded here. The fund continued to generate robust absolute and relative results in the fourth quarter. The fund increased 14.49% (Institutional Shares) in the quarter outperforming the Russell 2500 Growth Index’s (the Benchmark) 2.43%. Please spare some time to check the fund’s top 5 holdings to know more about their top bets for 2024.
In its fourth quarter 2024 investor letter, Baron Focused Growth Fund emphasized stocks such as Spotify Technology S.A. (NYSE:SPOT)Headquartered in Luxembourg City, Luxembourg, Spotify Technology S.A. (NYSE:SPOT) offers audio streaming subscription services. The one-month return of Spotify Technology S.A. (NYSE:SPOT) was 28.16%, and its shares gained 159.04% of their value over the last 52 weeks. On February 19, 2025, Spotify Technology S.A. (NYSE:SPOT) stock closed at $642.73 per share with a market capitalization of $131.017 billion.
Baron Focused Growth Fund stated the following regarding Spotify Technology S.A. (NYSE:SPOT) in its Q4 2024 investor letter:
“Spotify Technology S.A. (NYSE:SPOT) increased 21.4% in the quarter and helped performance by 136 bps. The company continues to improve its platform by adding new products and making it more beneficial for the consumer. This has resulted in an increase in subscribers along with significant pricing power. The company has started to institute more regular price increases, which is accelerating its revenue and margin growth. Further, the company has been able to increase prices without increasing its churn rate. We believe the business should be able to improve gross margins from 26% to between 30% and 35% over time while continuing to add subscribers and generate strong top- and bottom-line growth. This should result in an increase in cash flow. Given strong cash flow conversion rates, we believe the company could initiate a return of capital program in the near future. We believe Spotify’s valuation remains attractive despite its recent stock price increase. Founder & CEO Daniel Eck continues to own a 15% stake in the business.”
A person wearing headphones listening to an audio streaming service.
Spotify Technology S.A. (NYSE:SPOT) is in 25th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 101 hedge fund portfolios held Spotify Technology S.A. (NYSE:SPOT) at the end of the fourth quarter compared to 98 in the third quarter. While we acknowledge the potential of Spotify Technology S.A. (NYSE:SPOT) 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 Spotify Technology S.A. (NYSE:SPOT) and shared the list of best streaming service stocks to buy according to analysts. In addition, please check out our hedge fund investor letters Q4 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.