Baron Funds, an asset management firm, published its “Baron Asset Fund” third quarter 2021 investor letter – a copy of which can be downloaded here. A decline of 0.14% was delivered by the fund’s institutional shares for the third quarter of 2021, while the Russell Midcap Growth Index (the “Index”) declined 0.76%, and the S&P 500 Index gained 0.58%. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
Baron Asset Fund, in its Q3 2021 investor letter, mentioned Ceridian HCM Holding Inc. (NYSE: CDAY) and discussed its stance on the firm. Ceridian HCM Holding Inc. is a Minneapolis, Minnesota-based software company with an $18.3 billion market capitalization. CDAY delivered a 13.26% return since the beginning of the year, while its 12-month returns are up by 24.82%. The stock closed at $120.69 per share on November 16, 2021.
Here is what Baron Funds has to say about Ceridian HCM Holding Inc. in its Q3 2021 investor letter:
“Shares of payroll software provider Ceridian HCM Holding Inc. contributed to performance. Growth of Ceridian’s flagship Dayforce platform reaccelerated toward 30%, helped by continued market share gains, success in serving larger enterprises, and the ongoing employment recovery in the company’s installed customer base. We are particularly excited by growing customer adoption of the company’s Wallet suite. We believe this has the potential to revolutionize payroll software by enabling all employees being paid through Dayforce to request and receive their wages as they are earned, rather than on the typical two-week payment cycle.”
Based on our calculations, Ceridian HCM Holding Inc. (NYSE: CDAY) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. CDAY was in 25 hedge fund portfolios at the end of the first half of 2021, compared to 28 funds in the previous quarter. Ceridian HCM Holding Inc. (NYSE: CDAY) delivered a 14.47% return in the past 3 months.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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Disclosure: None. This article is originally published at Insider Monkey.
