Here’s Why Zillow Group (Z) Landed in Baron Funds’ Detractor List

Baron Funds, an asset management firm, published its “Baron FinTech Fund” third quarter 2021 investor letter – a copy of which can be downloaded here. A return of 2.65% was delivered by the fund’s institutional shares for the third quarter of 2021, compared to the S&P 500 Index, which appreciated 0.58%, and the FactSet Global FinTech Index which rose 3.72% for the same period. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.

Baron FinTech Fund, in its Q3 2021 investor letter, mentioned Zillow Group, Inc. (NASDAQ: Z) and discussed its stance on the firm. Zillow Group, Inc. is a Seattle, Washington-based online real estate marketplace company with a $13.8 billion market capitalization. Z delivered a -58.20% return since the beginning of the year, while its 12-month returns are down by -49.43%. The stock closed at $53.77 per share on December 02, 2021.

Here is what Baron FinTech Fund has to say about Zillow Group, Inc.  in its Q3 2021 investor letter:

“Underperformance of our investments in Communication Services and Financials detracted the most from relative results. Weakness in Communication Services again came from Zillow Group, Inc., which operates real estate websites, a mortgage marketplace, and a home-buying business. Zillow was the third largest detractor due to concerns about negative impacts on the housing market from higher interest rates as well as execution risks in the company’s home-buying business.

Zillow Group, Inc. operates leading U.S. real estate sites, a mortgage marketplace, and a home-buying business. Shares were down due to concerns around rising interest rates and the potential knock-on effects to the housing market. Our channel checks have indicated that the housing market remains robust. Even if demand were to soften, Zillow’s offering could become even more valuable as it delivers high-quality buyer and seller leads. Longer term, we believe Zillow has an ample runway for growth given its strong management team and large customer base.”

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Based on our calculations, Zillow Group, Inc. (NASDAQ: Z) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. Z was in 67 hedge fund portfolios at the end of the third quarter of 2021, compared to 76 funds in the previous quarter. Zillow Group, Inc. (NASDAQ: Z) delivered a -45.19% return in the past 3 months.

Disclosure: None. This article is originally published at Insider Monkey.