Baron Funds, an asset management firm, published its “Baron FinTech Fund” fourth quarter 2021 investor letter – a copy of which can be downloaded here. A return of 2.53% was delivered by the fund’s institutional shares for the fourth quarter of 2021, compared to its benchmarks, the S&P 500 Index, which appreciated 11.03%, and the FactSet Global FinTech Index which rose 7.68% for the same period. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
Baron FinTech Fund, in its Q4 2021 investor letter, mentioned LPL Financial Holdings Inc. (NASDAQ:LPLA) and discussed its stance on the firm. Founded in 1989, LPL Financial Holdings Inc. (NASDAQ:LPLA) is a San Diego, California-based investment and business solutions provider with a $13.0 billion market capitalization, and is currently spearheaded by its CEO, Dan Arnold. LPL Financial Holdings Inc. (NASDAQ:LPLA) delivered a 1.84% return since the beginning of the year, while its 12-month returns are up by 15.90%. The stock closed at $163.04 per share on March 15, 2022.
Here is what Baron FinTech Fund has to say about LPL Financial Holdings Inc. (NASDAQ:LPLA) in its Q4 2021 investor letter:
“We initiated a position in LPL Financial Holdings Inc., an independent broker-dealer for financial advisors. The U.S. market for financial advice continues to grow, as does the volume of assets that are advisor-mediated. There is also an ongoing migration away from wirehouses, such as Morgan Stanley and Wells Fargo, to independent firms in which the financial advisor runs their own practice and retains more of the economics. LPL offers an integrated technology platform, brokerage services, and practice management support that help advisors run their own independent advisory firms with a broad menu of investment options. LPL is the largest independent broker-dealer in the country with $1.1 trillion of assets under management and nearly 20,000 advisors on its platform. LPL is classified within the “Leader” category.
We believe that LPL has compelling growth opportunities and enjoys strong competitive advantages. As the largest independent broker-dealer, LPL has scale advantages from managing a growing pool of assets over a fixed cost base. LPL has invested heavily in technology over the past five years, and it also self-clears transactions, which provides additional revenue streams. These capabilities lead to superior margins and cash flow, which then enable LPL to invest more in its technology and better compete for new advisors. LPL continues to gather assets as advisors migrate away from the wirehouses. The company is shifting towards advisory fees paid as a percentage of assets under management and away from transaction-based brokerage commissions. Given this revenue model, LPL benefits from underlying asset appreciation, which is a natural tailwind to growing LPL’s asset base. LPL also earns cash sweep revenues on idle client cash balances. As interest rates rise, we believe LPL will be able to monetize these balances at higher yields, improving its overall return on assets. With a profitable business, good growth prospects, and underlying tailwinds, we believe that LPL is well positioned to continue growing earnings per share at a rapid rate.”
myriam-jessier-eveI7MOcSmw-unsplash
Our calculations show that LPL Financial Holdings Inc. (NASDAQ:LPLA) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. LPL Financial Holdings Inc. (NASDAQ:LPLA) was in 48 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 37 funds in the previous quarter. LPL Financial Holdings Inc. (NASDAQ:LPLA) delivered a 2.19% return in the past 3 months.
In November 2021, we also shared another hedge fund’s views on LPL Financial Holdings Inc. (NASDAQ:LPLA) in another article. You can find other letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.
Disclosure: None. This article is originally published at Insider Monkey.
