Baron Funds, an investment management company, released its “Baron Small Cap Fund” fourth-quarter 2022 investor letter. A copy of the same can be downloaded here. The fund was 4.24% up in the fourth quarter compared to a 4.13% return for the Russell 2000 Growth Index and a 7.56% return for the S&P 500 Index. For 2022, the fund was down 31.05% compared to a 26.36% fall for the Russell 2000 Growth Index and an 18.11% decline for the S&P 500 Index. Inflation and aggressive fed tightening impacted the fund’s performance in 2022. In addition, please check the fund’s top five holdings to know its best picks in 2022.
Baron Small Cap Fund highlighted stocks like Chart Industries, Inc. (NYSE:GTLS) in its Q4 2022 investor letter. Headquartered in Ball Ground, Georgia, Chart Industries, Inc. (NYSE:GTLS) is an engineered equipment for the energy and industrial gas industries manufacturer. On February 16, 2023, Chart Industries, Inc. (NYSE:GTLS) stock closed at $133.08 per share. One-month return of Chart Industries, Inc. (NYSE:GTLS) was 5.90% and its shares gained 10.16% of their value over the last 52 weeks. Chart Industries, Inc. (NYSE:GTLS) has a market capitalization of $5.664 billion.
Baron Small Cap Fund made the following comment about Chart Industries, Inc. (NYSE:GTLS) in its Q4 2022 investor letter:
“Chart Industries, Inc. (NYSE:GTLS) is a leading global manufacturer of highly engineered equipment servicing multiple applications in the clean energy and industrial gas markets. The company announced a large and transformational acquisition of Howden, a company of similar size to Chart, but the market hated the deal and the stock got hammered. The concerns were that Chart would have to take on lots of debt to do the deal, the acquired business is of lower quality, and the synergy estimates seemed aggressive. Our view, after much work and consideration, is that Howden is a fine business that fits very well with Chart, increasing its end-markets, expanding the geographic reach, and doubling the “nexus of clean” opportunities to address. We believe that the synergies are identified and significant, and that the deal will be accretive. We also believe that leverage will decline quickly from the free-cash-flow and asset dispositions we expect. Chart did a large equity raise near the end of the year at a depressed price, which we participated in and more than doubled our position in the stock. We believe Chart is a best-in-class industrial compounder focused on growing clean energy end-markets.
We added to our position in Chart Industries, Inc. during the quarter. Chart is a leader in cryogenic technology, process, and storage equipment sold into industrial gas and clean and traditional energy end-markets. We took advantage of a significant drop in share price when the company announced a $4.4 billion merger with private company Howden, a global leader in compressors and blowers, that approximately doubles Chart’s revenue and EBITDA. The stock sold off as the unexpected deal is the largest in the company’s history, which added integration risk, increased leverage at a time of elevated rates, and required the company to issue equity, all in the face of heightened macroeconomic uncertainty heading into 2023…” (Click here to read the full text)
Photo by Lalit Kumar on Unsplash
Chart Industries, Inc. (NYSE:GTLS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 22 hedge fund portfolios held Chart Industries, Inc. (NYSE:GTLS) at the end of the third quarter, which was 26 in the previous quarter.
We discussed Chart Industries, Inc. (NYSE:GTLS) in another article and Carillon Eagle Small Cap Growth Fund’s views on the company. In addition, please check out our hedge fund investor letters Q4 2022 page for more investor letters from hedge funds and other leading investors.
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