Baron Funds, an investment management company, released its “Baron FinTech Fund” fourth quarter 2024 investor letter. A copy of the letter can be downloaded here. For the fifth consecutive quarter, U.S. stocks increased, with most of the gains coming in November after the U.S. elections, which saw Republicans secure majorities in both chambers of Congress and President Donald Trump re-elected. In the fourth quarter, the fund rose 5.29% (Institutional Shares) compared to a 4.24% return for the FactSet Global FinTech Index (Benchmark) and a 2.41% gain for the S&P 500 index. Since inception, the fund has appreciated at an annualized rate of 12.17%, compared to 3.93% for the Benchmark. 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 FinTech Fund emphasized stocks such as Nu Holdings Ltd. (NYSE:NU). Nu Holdings Ltd. (NYSE:NU) is a digital banking platform provider, with a market capitalization of $64.793 billion. The one-month return of Nu Holdings Ltd. (NYSE:NU) was 10.58%, and its shares gained 30.12% of their value over the last 52 weeks. On February 19, 2025, Nu Holdings Ltd. (NYSE:NU) stock closed at $13.48 per share.
Baron FinTech Fund stated the following regarding Nu Holdings Ltd. (NYSE:NU) in its Q4 2024 investor letter:
“Nu Holdings Ltd. (NYSE:NU) is a digital bank with operations in Brazil, Mexico, and Colombia. Shares fell after the company reported a lower net interest margin and tightened underwriting criteria for unsecured loans. We see these impacts as temporary and tied to the company’s growth. The margin contraction was largely driven by rapid deposit growth in Mexico and Colombia, an intentional part of Nu’s client acquisition strategy. The tighter underwriting standards are a necessary part of the ongoing process of adjusting lending criteria to new clients. We remain confident in Nu’s growth prospects as the company is addressing key pain points faced by banking customers across the region, including high fees, poor customer service, and limited access to financial products. We believe its superior product offering will lead to continued share gains in the large and growing Latin American market.”
A person holding their smartphone, utilizing the company’s digital banking services from anywhere.
Nu Holdings Ltd. (NYSE:NU) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 79 hedge fund portfolios held Nu Holdings Ltd. (NYSE:NU) at the end of the fourth quarter which was 54 in the previous quarter. Nu Holdings Ltd.’s (NYSE:NU) revenue surged 56% year-over-year in the third quarter driven by effective cross-selling and up-selling strategies, as well as the launch of new products. While we acknowledge the potential of Nu Holdings Ltd. (NYSE:NU) 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 Nu Holdings Ltd. (NYSE:NU) and shared the list of best performing bank stocks so far in 2025. 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.