Baron Funds, an investment management company, released its “Baron Real Estate Fund” fourth quarter 2024 investor letter. A copy of the letter can be downloaded here. The fund increased 12.46% (Institutional Shares) in the full year compared to a 7.49% return for the MSCI US REIT Index (the REIT Index) and a 12.70% return for the MSCI USA IMI Extended Real Estate Index (the MSCI Real Estate Index). The fund decreased 2.98% in the fourth quarter, outperforming 6.39% and 4.69% declines for the indexes for the same period. In addition, please check the fund’s top five holdings to know its best picks in 2024.
In its fourth quarter 2024 investor letter, Baron Real Estate Fund emphasized stocks such as GDS Holdings Limited (NASDAQ:GDS). GDS Holdings Limited (NASDAQ:GDS) is a data center operator in the People’s Republic of China. The one-month return of GDS Holdings Limited (NASDAQ:GDS) was 64.08%, and its shares gained 453.73% of their value over the last 52 weeks. On February 26, 2025, GDS Holdings Limited (NASDAQ:GDS) stock closed at $40.09 per share with a market capitalization of $7.54 billion.
Baron Real Estate Fund stated the following regarding GDS Holdings Limited (NASDAQ:GDS) in its Q4 2024 investor letter:
“In the most recent quarter, we acquired additional shares in data center operator GDS Holdings Limited (NASDAQ:GDS). We believe the shares are attractively valued and offer compelling long-term growth prospects. Please see “Top contributors to performance for the quarter ended December 31, 2024” for more on GDS.
Shares of GDS Holdings Limited continued to perform well during the quarter, delivering returns into the mid-teens. We traveled to Asia in December to tour the company’s newly developed data center campus in Malaysia, spend additional time with GDS International’s executive team, and conduct competitor/market due diligence by meeting with the management teams of several global competitors based in Singapore. We also had the opportunity to meet the management team of the largest utility in Malaysia providing power to GDS and competitors, which provided valuable insight on the developing market. We also traveled to Hong Kong to meet, once again, with CEO/founder William Huang and CFO Daniel Newman while touring one of the company’s urban data centers with the local operating team. We came away with more confidence regarding the demand visibility and growth that GDS can capture in this region due to its first mover and other competitive advantages. In addition, we believe GDS will be able to secure additional high-demand power capacity in Southeast Asia and other international markets, which will elongate the growth profile of the company and is not currently appreciated by the broader investment community.
We remain optimistic about the company’s growth prospects over the next several years, which can be bucketed into: i) its Asia ex-China data center business (GDS International or GDSI); and ii) its mainland China data center business (GDS Holdings or GDSH)…” (Click here to read the full text)
A top level executive looking out of a skyscraper window, symbolizing the strategic decisions taken by the company.
GDS Holdings Limited (NASDAQ:GDS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 32 hedge fund portfolios held GDS Holdings Limited (NASDAQ:GDS) at the end of the fourth quarter compared to 32 in the third quarter. While we acknowledge the potential of GDS Holdings Limited (NASDAQ:GDS) 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 GDS Holdings Limited (NASDAQ:GDS) and shared the list of AI stocks on analysts’ radar as AI spending grows. In addition, please check out our hedge fund investor letters Q4 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.