Baron Asset Fund recently published its first-quarter commentary – a copy of which can be downloaded here. During the first quarter of 2021, the Baron Asset Fund returned -1.03% (institutional shares). In comparison, the benchmark S&P 500 Index was up 6.17%, while the Russell Midcap Growth Index was down 0.57%. You should check out Baron Asset Fund’s top 5 stock picks for investors to buy right now, which could be the biggest winners of 2021.
In the Q1 2021 Investor Letter, the fund highlighted a few stocks and EPAM Systems Inc. (NYSE:EPAM) is one of them. EPAM Systems Inc. (NYSE:EPAM) specializes in product development, digital platform engineering, and digital and product design. In the last three months, EPAM Systems Inc. (NYSE:EPAM) stock gained 35.4% and on April 27th it had a closing price of $458.84. Here is what the fund said:
“We also initiated a position in EPAM Systems, Inc., which provides consulting and outsourced software development for business customers using highly skilled, low-cost employees based mostly in Eastern Europe. Competition is forcing businesses to invest more in technology and digital transformation to increase agility and better serve their customers. Corporate leaders are increasingly viewing technology as a strategic priority to grow revenue rather than merely as an operating expense to run the business. However, companies often lack the necessary talent and skills to drive digital transformation, so many turn to outsourced providers like EPAM. EPAM is well suited for this shift in corporate IT spending to software modernization, data and analytics, and cloud migration given its workforce of 37,000 engineers, designers, and consultants with valuable expertise in advanced technologies.
Within the $1 trillion global market for IT services, EPAM focuses on the $150 billion segment for digital platform and product engineering services, which is growing at a double-digit rate. With less than a 2% share of a highly fragmented market, we believe that EPAM has an extensive runway for growth. EPAM’s advanced technical capabilities and differentiated talent pool enable the company to work on higher-value projects with better pricing power than peers. EPAM has longstanding relationships with over 400 clients, including Bridgewater Associates, Expedia, Google, Regeneron Pharmaceuticals, and UBS. Management targets 20% or better organic revenue growth, which is being supplemented with tuck-in acquisitions that expand its geographic reach and customer mix. We believe EPAM will continue gaining share in a large, growing market by adding new clients and increasing wallet share with existing clients.”
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In Q4 2020, the number of bullish hedge fund positions on EPAM Systems Inc. (NYSE:EPAM) stock decreased by about 3% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t believe in EPAM’s growth potential. Our calculations showed that EPAM Systems Inc. (NYSE:EPAM) isn’t ranked among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
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Disclosure: None. This article is originally published at Insider Monkey.
