Baron Funds, an asset management firm, published its “Baron FinTech Fund” second quarter 2021 investor letter – a copy of which can be downloaded here. A return of 16.79% was delivered by the fund’s institutional shares for the Q2 of 2021, outperforming the S&P 500 Index, which appreciated 8.55%, and the FactSet Global FinTech Index which rose 5.40% for the same period. You can take a look at the fund’s top 5 holdings to have an idea about their top bets for 2021.
In the Q2 2021 investor letter of Baron Funds, the fund mentioned Duck Creek Technologies, Inc. (NASDAQ: DCT) and discussed its stance on the firm. Duck Creek Technologies, Inc. is a Boston, Massachusetts-based software company with a $6.3 billion market capitalization. DCT delivered a 10.76% return since the beginning of the year, while its 12-month returns are up by 30.97%. The stock closed at $47.96 per share on September 3, 2021.
Here is what Baron Funds has to say about Duck Creek Technologies, Inc. in its Q2 2021 investor letter:
“Duck Creek Technologies, Inc. is a leading provider of core systems software for the property & casualty insurance industry. The company reported results that beat Street estimates with subscription revenue up 51% and SaaS annual recurring revenue up 75% as insurers of all sizes seek to modernize their technology systems. Despite the company’s strong momentum, the stock fell modestly during the quarter, which was enough to make it a top five detractor. We continue to own Duck Creek due to its strong product set and long runway for growth.”
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Based on our calculations, Duck Creek Technologies, Inc. (NASDAQ: DCT) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. DCT was in 18 hedge fund portfolios at the end of the first half of 2021, compared to 19 funds in the previous quarter. Duck Creek Technologies, Inc. (NASDAQ: DCT) delivered a 20.50% 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.
