Baron Funds, an asset management firm, published its “Baron Fintech Fund” first-quarter 2022 investor letter – a copy of which can be downloaded here. In the quarter ended March 31, 2022, Baron FinTech Fund (the “Fund”) fell 16.67% (Institutional Shares) compared with a 4.60% decline for the S&P 500 Index (the “Benchmark”) and a 12.78% decline for the FactSet Global FinTech Index. Try to spend some time looking at the fund’s top 5 holdings to be informed about their best picks for 2022.
In its Q1 2022 investor letter, Baron Fintech Fund mentioned Globant S.A. (NYSE:GLOB) and explained its insights for the company. Founded in 2003, Globant S.A. (NYSE:GLOB) is a Buenos Aires, Argentina-based software development company with an $8.0 billion market capitalization. Globant S.A. (NYSE:GLOB) delivered a -38.50% return since the beginning of the year, while its 12-month returns are down by -11.43%. The stock closed at $193.15 per share on June 10, 2022.
Here is what Baron Fintech Fund has to say about Globant S.A. (NYSE:GLOB) in its Q1 2022 investor letter:
“We also initiated a position in Globant, S.A., a provider of outsourced software development, design, and digital marketing services for business customers. Globant helps companies such as Disney (NYSE:DIS), Electronic Arts (NASDAQ:EA), and Banco Santander (NYSE:SAN) pursue digital transformations using a highly skilled workforce of over 23,000 software engineers and consultants primarily based in Latin America. These employees are trained in the latest technologies, including cloud infrastructure, cybersecurity, data analytics, artificial intelligence, digital marketing, enterprise software platforms, blockchain, connected devices, and metaverse. The company was founded in 2003 by four friends in Argentina who still run the company, including Chairman and CEO Martín Migoya. Globant serves over 1,100 customers across a variety of sectors, but its largest vertical is financial services. The company helps financial institutions adopt digital lending practices, improve operational efficiency, optimize risk management practices, comply with changing regulations, and launch new payment and open banking solutions.
We have long admired Globant’s success and used a recent valuation pullback to buy the stock. Like our other digital IT services companies (e.g., Endava, Accenture, and CI&T), Globant benefits from the growing need for digital transformation from businesses around the world. Revenue and earnings per share have grown at annualized rates of 32% and 29%, respectively, over the last five years. Management noted on the most recent earnings call that “demand for our end-to-end digital services and platforms is much stronger now than it was before the COVID-19 pandemic,” which should support robust growth in the coming years. Globant operates in a large and fast-growing global market that IDC estimates is approximately $650 billion in size growing at a mid-teens rate. Globant is growing much faster than the market from both organic expansion and accretive acquisitions. While barriers to entry are low in the IT services industry, barriers to success are high due to long sales cycles, the importance of strong reputations and personal relationships, and a global shortage of IT talent. In contrast to other digital IT services companies based in central and eastern Europe, Globant’s presence in Latin America confers advantages from being in the same time zone as North American clients and from lower geopolitical risk around the Russia-Ukraine war.”
Photo by Danial Igdery on Unsplash
Our calculations show that Globant S.A. (NYSE:GLOB) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Globant S.A. (NYSE:GLOB) was in 31 hedge fund portfolios at the end of the first quarter of 2022, compared to 26 funds in the previous quarter. Globant S.A. (NYSE:GLOB) delivered a -14.65% return in the past 3 months.
In February 202, we also shared another hedge fund’s views on Globant S.A. (NYSE:GLOB) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.
Disclosure: None. This article is originally published at Insider Monkey.
