Baron Funds, an investment management company, released its “Baron Opportunity Fund” second quarter 2024 investor letter. A copy of the letter can be downloaded here. In the second quarter, the fund rose 4.35% (Institutional Shares), lagged the Russell 3000 Growth Index, which gained 7.80%, and essentially matched the S&P 500 Index, which advanced 4.28%. In the first half of 2024, the fund posted solid gains, rising 20.44% compared to a 19.90% return for the Russell 3000 Growth Index and beating the S&P 500 Index’s 15.29% gain. After a slow start to the quarter, U.S. stocks increased steadily in May and June. Increased worries about inflation, the pace of expected rate cuts by the Federal Reserve, and growing geopolitical tensions in the Middle East were blamed for the early market weakness. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2024.
Baron Opportunity Fund highlighted stocks like Datadog, Inc. (NASDAQ:DDOG) in the second quarter 2024 investor letter. Datadog, Inc. (NASDAQ:DDOG) is an observability and security platform for cloud applications. The one-month return of Datadog, Inc. (NASDAQ:DDOG) was -2.14%, and its shares gained 28.19% of their value over the last 52 weeks. On August 21, 2024, Datadog, Inc. (NASDAQ:DDOG) stock closed at $117.74 per share with a market capitalization of $39.696 billion.
Baron Opportunity Fund stated the following regarding Datadog, Inc. (NASDAQ:DDOG) in its Q2 2024 investor letter:
“In our view, the enterprise software winners will have to be better at delivering AI services and features than build-your-own AI tools, and they will have to use their incumbency or leadership advantages to ward off upstarts. We believe the winners will be the ones that have a well-established product development culture of innovation and iteration; differentiated proprietary, industry, and customer data; distribution advantages with large customer bases, successful go-to-market efforts, and key partners; well-designed workflows where AI improves the user interface, intelligent predictions/recommendations, and automation; and established always-on connectivity and feedback from their customers; among other things.
Here are a few examples of our software investments that we believe are AI winners: Datadog, Inc. (NASDAQ:DDOG), a cloud observability platform that the leading LLM providers are using today to monitor their AI apps; these AI customers are already driving nearly $100 million of annual recurring revenue for Datadog already.”
A close-up of a laptop with a software engineer coding on the monitor.
Datadog, Inc. (NASDAQ:DDOG) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 79 hedge fund portfolios held Datadog, Inc. (NASDAQ:DDOG) at the end of the second quarter which was 77 in the previous quarter. In the second quarter Datadog, Inc.’s (NASDAQ:DDOG) revenue increased by 27% year-over-year to $645 million. While we acknowledge the potential of Datadog, Inc. (NASDAQ:DDOG) 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 Datadog, Inc. (NASDAQ:DDOG) and shared Jim Cramer’s Top bullish stock picks. In addition, please check out our hedge fund investor letters Q2 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.
