Baron Funds, an investment management company, released its “Baron Asset Fund” second quarter 2023 investor letter. A copy of the same can be downloaded here. U.S. equities continued their upward trend in the second consecutive quarter. The rise was led by the outsized performance of a few large technology companies, partly driven by the hype surrounding their potential benefits from the widespread adoption of artificial intelligence (AI). Against this backdrop, the Baron Asset Fund increased by 3.63% (Institutional Shares) trailing Russell Midcap Growth Index’s 6.23% returns. The underperformance of certain stocks affected the fund in the quarter. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Baron Asset Fund highlighted stocks like Guidewire Software, Inc. (NYSE:GWRE) in the second quarter 2023 investor letter. Headquartered in San Mateo, California, Guidewire Software, Inc. (NYSE:GWRE) is a software product-providing company for P&C insurers. On July 27, 2023, Guidewire Software, Inc. (NYSE:GWRE) stock closed at $80.47 per share. One-month return of Guidewire Software, Inc. (NYSE:GWRE) was 5.77%, and its shares gained 3.54% of their value over the last 52 weeks. Guidewire Software, Inc. (NYSE:GWRE) has a market capitalization of $6.554 billion.
Baron Asset Fund made the following comment about Guidewire Software, Inc. (NYSE:GWRE) in its second quarter 2023 investor letter:
“During the quarter, adverse stock selection in IT contributed to the Fund’s relative shortfall. Weakness in the sector came from the Fund’s application software holdings, namely Ceridian HCM Holding Inc. and Guidewire Software, Inc. (NYSE:GWRE), which are market leaders in their respective verticals of human capital management (HCM) and insurance software. Guidewire’s shares fell after announcing mixed quarterly results. On the positive side, Guidewire made excellent progress on subscription gross margins, grew annual recurring revenue (ARR) faster than expected, and gave upside margin guidance for fiscal year 2024. On the downside, new ARR deals came with steeper ramps, services revenue slipped because of some legacy fixed price service contracts, and cash collection cycles extended during the quarter. Despite the mixed performance, we remain optimistic about the company’s long-term prospects. The company has crossed the midpoint of its cloud transition and is demonstrating more consistent recurring revenue growth and durable gross margin expansion. We believe Guidewire will be the critical software vendor for the global P&C insurance industry, likely capturing 30% to 50% of its $15 billion to $30 billion total addressable market and generating margins above 40%.”
Guidewire Software, Inc. (NYSE:GWRE) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 40 hedge fund portfolios held Guidewire Software, Inc. (NYSE:GWRE) at the end of first quarter which was 43 in the previous quarter.
We discussed Guidewire Software, Inc. (NYSE:GWRE) in another article and shared stocks receiving upgrades from analysts. In addition, please check out our hedge fund investor letters Q2 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.
