Baron Funds, an investment management company, released its “Baron Asset Fund” third quarter 2024 investor letter. A copy of the letter can be downloaded here. US equities ended the quarter higher for the fourth quarter in a row. The Fed’s long-awaited interest rate cuts and generally positive economic data caused a significant shift from large-cap, Magnificent Seven, growth, and momentum stocks toward value, cyclical, and small-cap stocks. Against this backdrop, Baron Asset Fund returned 8.34% (Institutional Shares) in the quarter, outperforming the Russell Midcap Growth Index’s 6.54% return. The stock returns in the quarter were driven by Earnings Quality and the favorable environment for the firm’s investment strategy. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Baron Asset Fund highlighted stocks like The Charles Schwab Corporation (NYSE:SCHW) in the third quarter 2024 investor letter. The Charles Schwab Corporation (NYSE:SCHW) is a savings and loan holding company that offers wealth management, securities brokerage, banking, asset management, custody, and financial advisory services. The one-month return of The Charles Schwab Corporation (NYSE:SCHW) was 13.48%, and its shares gained 36.10% of their value over the last 52 weeks. On October 29, 2024, The Charles Schwab Corporation (NYSE:SCHW) stock closed at $71.89 per share with a market capitalization of $131.511 billion.
Baron Asset Fund stated the following regarding The Charles Schwab Corporation (NYSE:SCHW) in its Q3 2024 investor letter:
“The Charles Schwab Corporation (NYSE:SCHW) detracted from performance following a weak second quarter update. The broker-dealer generates significant earnings from net interest income on idle client cash. Clients have been moving cash into higher-yielding money market funds, forcing Schwab to utilize external sources of funding to support its balance sheet. This external funding is more costly than other liabilities on its balance sheet, and it is intended to be temporary. However, it has taken Schwab longer than expected to reduce its reliance on these funds, which disappointed the market. While the timing has been extended, we believe Schwab will eventually pay down these funds, leading to accelerated earnings growth.”
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The Charles Schwab Corporation (NYSE:SCHW) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 72 hedge fund portfolios held The Charles Schwab Corporation (NYSE:SCHW) at the end of the second quarter which was 71 in the previous quarter. The third quarter revenue of The Charles Schwab Corporation (NYSE:SCHW) increased 5% year-over-year to $4.8 billion. While we acknowledge the potential of The Charles Schwab Corporation (NYSE:SCHW) 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 The Charles Schwab Corporation (NYSE:SCHW) and shared Madison Investors Fund’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.