Baron Funds, an investment management company, released its “Baron Real Estate Fund” fourth quarter 2023 investor letter. A copy of the same can be downloaded here. The fund had a strong performance in 2023 and generated a gain of 25.04% (Institutional Shares). This is more than double the MSCI US REIT Index (the REIT Index), which rose 12.27% and also outperformed the MSCI USA IMI Extended Real Estate Index’s 23.09% return. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Baron Real Estate Fund featured stocks such as Digital Realty Trust, Inc. (NYSE:DLR) in the fourth quarter 2023 investor letter. Digital Realty Trust, Inc. (NYSE:DLR) is an enterprise and service provider that delivers the full spectrum of data center, colocation, and interconnection solutions. On January 22, 2024, Digital Realty Trust, Inc. (NYSE:DLR) stock closed at $140.58 per share. One-month return of Digital Realty Trust, Inc. (NYSE:DLR) was 3.69%, and its shares gained 31.38% of their value over the last 52 weeks. Digital Realty Trust, Inc. (NYSE:DLR) has a market capitalization of $43.486 billion.
Baron Real Estate Fund stated the following regarding Digital Realty Trust, Inc. (NYSE:DLR) in its fourth quarter 2023 investor letter:
“Following strong share performance, we trimmed our large investment in data center REIT Digital Realty Trust, Inc. (NYSE:DLR). We remain optimistic about the long-term potential for the company.
Data center landlords such as Digital Realty (and Equinix, Inc.) are benefiting from record low vacancy, demand outpacing supply, more constrained power availability, and rising rental rates. Several secular demand vectors, which are currently broadening, are contributing to robust fundamentals for data center space globally. They include the outsourcing of information technology infrastructure, increased cloud computing adoption, the ongoing growth in mobile data and internet traffic, and artificial intelligence as a new wave of data center demand.
In the last few months, we have also spent time with CEO Andy Power of Digital Realty. Over the last few years, Andy and Digital Realty’s management team have been undergoing a business transformation, which accelerated after its acquisition of Interxion in March 2020, a pure-play European network-dense data center operator. The company has been shedding non-core slower-growth assets, investing and expanding in Europe, growing its retail colocation business, improving its balance sheet, and adding operational expertise by supplementing new management leadership. We have spent a significant amount of time with Andy over the years and believe the investments the company has made are on the cusp of bearing fruit and will pay dividends for years to come. In addition, we believe the fundamentals in its core business are at an inflection point with robust demand/bookings, pricing power, hyperscale cloud players outsourcing a higher percentage of their digital infrastructure needs and limited competitive capacity. We believe these factors will lead to growth in the core business in the next few years and are optimistic about the long-term prospects for the company.”
A close-up view of a technician installing a server in the data center facility, representing the reliable services provided by the company.
Digital Realty Trust, Inc. (NYSE:DLR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 27 hedge fund portfolios held Digital Realty Trust, Inc. (NYSE:DLR) at the end of third quarter which was 29 in the previous quarter.
We discussed Digital Realty Trust, Inc. (NYSE:DLR) in another article and shared the list of most profitable real estate stocks. In addition, please check out our hedge fund investor letters Q4 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.
