Baron Funds, an asset management firm, published its “Baron Small Cap Fund” fourth quarter 2021 investor letter – a copy of which can be downloaded here. A return of 4.69% was delivered by the fund’s institutional shares for the fourth quarter of 2021 and 15.84% for the year. This well exceeded the returns of the Russell 2000 Growth Index (the “Index”), which was flat in the fourth quarter and up 2.83% for the year. This was a quarter and a year where small-cap stocks did worse than large caps. The S&P 500 Index gained 11.03% in the quarter and 28.71% for the year. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
Baron Small Cap Fund, in its Q4 2021 investor letter, mentioned Installed Building Products, Inc. (NYSE: IBP) and discussed its stance on the firm. Installed Building Products, Inc. is a Columbus, Ohio-based residential insulation installer with a $3.1 billion market capitalization. IBP delivered a -24.43% return since the beginning of the year, while its 12-month returns are down by -17.76%. The stock closed at $105.59 per share on February 11, 2022.
Here is what Baron Small Cap Fund has to say about Installed Building Products, Inc. in its Q4 2021 investor letter:
“Installed Building Products, Inc. (“IBP”) is a market leading installer of insulation and complementary building products serving the U.S. residential housing market and non-residential construction industries. The company reported 21% sales growth, 24% profit growth, and improved “price/mix,” as it successfully passed on increases in raw material prices. Housing trends remain robust; however, completions are still lagging orders, which bodes well for a long upcycle for installers. Business operations are still hindered by supply-chain disruptions, which are weighing on near-term gross margins. But labor availability is in good steads, as management’s well-conceived efforts to retain installers has succeeded. As anticipated, this has been a big year for acquisitions. IBP has done 10 deals, adding $200 million in revenues, a large uptick from prior years. Acquisitions are highly accretive and strategic in building out a national footprint, increasing the company’s product offerings and expanding its lines of business. We believe that the company will grow organically by double digits, will grow EBITDA more rapidly due to the benefits of the acquisitions, and is trading at a reasonable value on our 2022 estimates…a good setup for future returns.”
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Our calculations show that Installed Building Products, Inc. (NYSE: IBP) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. IBP was in 15 hedge fund portfolios at the end of the third quarter of 2021, compared to 12 funds in the previous quarter. Installed Building Products, Inc. (NYSE: IBP) delivered a -21.02% return in the past 3 months.
In December 2021, we also shared another hedge fund’s views on IBP in another article. You can find other letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.
Disclosure: None. This article is originally published at Insider Monkey.
