Baron Funds, an investment management company, released its “Baron Real Estate Fund” first quarter 2023 investor letter. A copy of the same can be downloaded here. In the first quarter, the fund rose 7.07% (Institutional Shares) compared to a 2.39% return for the MSCI US REIT Index (the “REIT Index”) and a 4.73% return for the MSCI USA IMI Extended Real Estate Index (the “MSCI Real Estate Index”). The firm is optimistic about the prospects for the stock market, public real estate securities, and the fund. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Baron Real Estate Fund highlighted stocks like CoStar Group, Inc. (NASDAQ:CSGP) in the first quarter 2023 investor letter. Headquartered in Washington, the District of Columbia, CoStar Group, Inc. (NASDAQ:CSGP) provides information, analytics, and online marketplace services to commercial real estate, hospitality, residential, and related professional industries. On June 27, 2023, CoStar Group, Inc. (NASDAQ:CSGP) stock closed at $89.92 per share. One-month return of CoStar Group, Inc. (NASDAQ:CSGP) was 13.25%, and its shares gained 49.34% of their value over the last 52 weeks. CoStar Group, Inc. (NASDAQ:CSGP) has a market capitalization of $36.736 billion.
Baron Real Estate Fund made the following comment about CoStar Group, Inc. (NASDAQ:CSGP) in its first quarter 2023 investor letter:
“Shares of CoStar Group, Inc. (NASDAQ:CSGP). declined 11% in the first quarter of 2023 after performing well on a relative basis last year. We attribute the stock’s decline to management announcing a dramatic increase in its investment to grow its residential business. Despite the decline, we remain optimistic about the long-term prospects for CoStar and acquired additional shares late in the first quarter.
CoStar is the leading provider of information, analytics, and marketing services to the real estate industry. CoStar initially focused on serving the domestic commercial real estate industry and built a comprehensive proprietary database of essential data to help participants buy, sell, and lease properties. The company has since expanded its focus to offer products and services to multi-family, industrial, commercial land, mixed-use and hospitality end-markets across North America and Western Europe.
Today, the company’s non-residential operations generate over $2 billion of recurring revenue with cash flow (EBITDA) margins above 40%. We expect this portion of the business to grow its revenue at a mid-teens rate for several years as the company launches new products, upsells existing customers, and raises prices. We expect profit and cash flow to grow at an even faster rate given the low marginal costs inherent in CoStar’s business model. We think that cash flow from this business can double over the next five years, which implies a similar return for the stock…” (Click here to read the full text)
Speedcurve Performance Analytics
CoStar Group, Inc. (NASDAQ:CSGP) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 43 hedge fund portfolios held CoStar Group, Inc. (NASDAQ:CSGP) at the end of the fourth quarter which was 46 in the previous quarter.
We discussed CoStar Group, Inc. (NASDAQ:CSGP) in another article and shared Conestoga Mid Cap Strategy’s views on the company. In addition, please check out our hedge fund investor letters Q1 2023 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.
