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 Gartner, Inc. (NYSE: IT) and discussed its stance on the firm. Gartner, Inc. is a Stamford, Connecticut-based technology research and consulting company with a $27.4 billion market capitalization. IT delivered a 107.64% return since the beginning of the year, while its 12-month returns are up by 115.96%. The stock closed at $332.62 per share on November 16, 2021.
Here is what Baron Funds has to say about Gartner, Inc. in its Q3 2021 investor letter:
“Shares of Gartner, Inc., a provider of syndicated research, consulting services, and industry conferences, contributed to performance after the company reported financial results that exceeded Street estimates. Revenue growth in Gartner’s research business, its largest segment, reaccelerated to double-digit levels after being depressed by pandemic-driven headwinds. Research growth was led by the company’s GBS segment, which benefited from its multi-year investment cycle. We expect ongoing revenue growth and renewed focus on cost control to drive margin expansion and enhanced free cash flow generation. In addition, Gartner’s balance sheet is in excellent shape, allowing the company to aggressively repurchase its shares and to make accretive bolt-on acquisitions.”
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Based on our calculations, Gartner, Inc. (NYSE: IT) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. IT was in 39 hedge fund portfolios at the end of the first half of 2021, compared to 40 funds in the previous quarter. Gartner, Inc. (NYSE: IT) delivered a 10.07% 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.
