Baron Funds, an investment management company, released its “Baron FinTech Fund” second quarter 2024 investor letter. A copy of the letter can be downloaded here. In the second quarter, the fund declined 2.25% (Institutional Shares) compared to a (5.78)% return for the FactSet Global FinTech Index (Benchmark) and a 4.28% gain for the S&P 500 index. US equities rose with major market indices reaching all-time highs during the second quarter. Overwhelming corporate results were accompanied by mixed economic data that points to further moderation of inflation. However, the rally was concentrated and driven by mega-cap technology companies. The fund’s smaller market cap profile and lack of exposure to the Magnificent Seven led the fund to underperform the broader market. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Baron FinTech Fund highlighted stocks like Fair Isaac Corporation (NYSE:FICO), in the second quarter 2024 investor letter. Fair Isaac Corporation (NYSE:FICO) develops analytic, software, and digital decision-making technologies and services. The one-month return of Fair Isaac Corporation (NYSE:FICO) was 10.20%, and its shares gained 100.11% of their value over the last 52 weeks. On August 9, 2024, Fair Isaac Corporation (NYSE:FICO) stock closed at $1,752.25 per share with a market capitalization of $42.963 billion.
Baron FinTech Fund stated the following regarding Fair Isaac Corporation (NYSE:FICO) in its Q2 2024 investor letter:
“Fair Isaac Corporation (NYSE:FICO) is a data and analytics company focused on predicting consumer behavior and is best known for its ubiquitous FICO scores. Shares increased after the company reported solid quarterly results and raised annual guidance. During the quarter, we attended the company’s annual user conference where CEO Will Lansing expressed confidence about the business’s performance under varying macroeconomic conditions and was optimistic about the growth potential for the software business. The market brushed off areas of near-term uncertainty, such as the impact of consumer lending activity on Scores volumes and a potential regulatory investigation into Scores pricing, and instead focused on the likely benefits of Federal Reserve rate cuts.
Mortgage originations are running 50% below the long-term historical average, so we estimate that a return to normal activity would increase FICO’s earnings by half. We continue to own the stock because of FICO’s significant competitive advantages and expect that consistent earnings growth will drive attractive returns for the stock over the long term.”
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Fair Isaac Corporation (NYSE:FICO) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 45 hedge fund portfolios held Fair Isaac Corporation (NYSE:FICO) at the end of the first quarter which was 49 in the previous quarter. In the third quarter of the fiscal year, Fair Isaac Corporation’s (NYSE:FICO) revenues increased by 12% to $448 million, while its GAAP net income decreased by 2% to $126 million, and GAAP earnings decreased by 1% to $5.05 per share. While we acknowledge the potential of Fair Isaac Corporation (NYSE:FICO) 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 Fair Isaac Corporation (NYSE:FICO) and shared The Brown Capital Management Mid Company Fund’s views on the company. In addition, please check out our hedge fund investor letters Q2 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.
