Baron Funds, an investment management company, released its “Baron Small Cap Fund” third-quarter 2023 investor letter. A copy of the same can be downloaded here. The fund had a fine quarter and is having a good year. The fund was down 3.11% (Institutional Shares) in the third quarter, in a weak market and year-to-date the fund was up 12.92%. The Fund outperformed the Russell 2000 Growth Index, which fell 7.32% in the quarter and is only up 5.24% year-to-date. The Fund slightly outperformed the S&P 500 Index in the quarter but is trailing year-to-date. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Baron Small Cap Fund highlighted stocks like Driven Brands Holdings Inc. (NASDAQ:DRVN) in the third quarter 2023 investor letter. Headquartered in Charlotte, North Carolina, Driven Brands Holdings Inc. (NASDAQ:DRVN) provides automotive services to retail and commercial customers. On November 27, 2023, Driven Brands Holdings Inc. (NASDAQ:DRVN) stock closed at $13.34 per share. One-month return of Driven Brands Holdings Inc. (NASDAQ:DRVN) was 17.22%, and its shares lost 55.08% of their value over the last 52 weeks. Driven Brands Holdings Inc. (NASDAQ:DRVN) has a market capitalization of $2.187 billion.
Baron Small Cap Fund made the following comment about Driven Brands Holdings Inc. (NASDAQ:DRVN) in its Q3 2023 investor letter:
“Driven Brands Holdings Inc. (NASDAQ:DRVN) is the largest automotive services company in North America, providing a range of need-based services to consumer and commercial customers through 4,800-plus locations. The company operates many well-known and trusted brands that provide customers with a full suite of automotive services across paint, collision, glass, vehicle repair, oil change (Take 5), maintenance, and car wash. The stock declined significantly during the quarter after the company reduced its revenue and profitability expectations for the balance of the year, driven by weakness in its car wash business and integration delays in the company’s recent foray into the glass repair segment. The company is now in the process of reviewing each of its car wash locations to determine how they fit in the portfolio and have paused future development as the company implements processes to improve operations and use FCF to de-lever the balance sheet. In glass, while Driven remains encouraged by the long-term potential to consolidate the glass industry, they are a few quarters behind where they anticipated due to integration delays of the recent businesses they’ve acquired. Despite these challenges, we think the stock has overreacted to the downside, and are currently evaluating management’s long-term assumptions calling for EBITDA to more than double over the next three years.”
A car in a service bay being inspected by a technician for a routine maintenance service.
Driven Brands Holdings Inc. (NASDAQ:DRVN) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 24 hedge fund portfolios held Driven Brands Holdings Inc. (NASDAQ:DRVN) at the end of third quarter which was 20 in the previous quarter.
We discussed Driven Brands Holdings Inc. (NASDAQ:DRVN) in another article and shared TimesSquare U.S. Small Cap Growth Strategy’s views on the company. In addition, please check out our hedge fund investor letters Q3 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.
