Baron Funds, an investment management company, released its “Baron Opportunity Fund” first quarter 2023 investor letter. A copy of the same can be downloaded here. In the first quarter, the fund outperformed the broader market and increased by 17.96% (Institutional Shares) compared to a 13.85% return for the Russell 3000 Growth Index and a 7.50% return for the S&P 500 Index. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Baron Opportunity Fund highlighted stocks like Amazon.com, Inc. (NASDAQ:AMZN) in the first quarter 2023 investor letter. Headquartered in Seattle, Washington, Amazon.com, Inc. (NASDAQ:AMZN) provides consumer products and subscriptions. On May 9, 2023, Amazon.com, Inc. (NASDAQ:AMZN) stock closed at $106.62 per share. One-month return of Amazon.com, Inc. (NASDAQ:AMZN) was 8.98%, and its shares gained 1.18% of their value over the last 52 weeks. Amazon.com, Inc. (NASDAQ:AMZN) has a market capitalization of $1.094 trillion.
Baron Opportunity Fund made the following comment about Amazon.com, Inc. (NASDAQ:AMZN) in its Q1 2023 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN) is the world’s largest retailer and cloud infrastructure services provider. Shares were up in the quarter, driven by positive commentary and actions around cost discipline as well as the broader technology rally. We believe Amazon is well positioned in the short to medium term to meaningfully improve core North American retail profit margins to pre-pandemic levels, mainly by rationalizing fulfillment center costs. The focus on cost discipline has expanded to the whole company, with a second major round of layoffs and CEO Andy Jassy declaring, “Over the last several months, we took a deep look across the company, business by business, invention by invention, and asked ourselves whether we had conviction about each initiative’s long-term potential to drive enough revenue, operating income, free cash flow, and return on invested capital.” From a top-line growth perspective, Amazon has substantially more room to grow in e-commerce, where it has roughly 15% penetration of its total addressable market, and in retail advertising, which is now a $45 billion annualized business with attractive margins, still growing at a 20% constant-currency rate despite the challenging economic backdrop. In addition, Amazon also remains a leader in the vast and growing cloud infrastructure market with Amazon Web Services (AWS). While AWS is facing the same optimization headwinds as Azure, we believe its long-term opportunity is the same and that AWS can grow over 20% in a normalized macro environment. In his recent shareholder letter, Jassy stated: “While these short-term [macroeconomic and optimization] headwinds soften our growth rate, we like a lot of the fundamentals that we’re seeing in AWS. Our new customer pipeline is robust, as are our active migrations…. AWS is still in the early stages of its evolution and has a chance for unusual growth in the next decade.” Finally, though it has not been as splashy as its peers so far, Amazon is also well positioned to provide computing infrastructure for the forthcoming generative AI wave, announcing services like Amazon Bedrock, which allow customers to use the supported large language model of their choice, and CodeWhisperer, a tool for software developers to autocomplete code using generative AI.”
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Amazon.com, Inc. (NASDAQ:AMZN) is in 2nd position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 240 hedge fund portfolios held Amazon.com, Inc. (NASDAQ:AMZN) at the end of the fourth quarter which was 269 in the previous quarter.
We discussed Amazon.com, Inc. (NASDAQ:AMZN) in another article and shared the list of best data center stocks to buy. In addition, please check out our hedge fund investor letters Q1 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.
