Baron Funds, an investment management company, released its “Baron Real Estate Fund” second quarter 2024 investor letter. A copy of the letter can be downloaded here. The fund declined 9.20% (Institutional Shares) in the second quarter compared to a 0.22% decline for the MSCI US REIT Index (the REIT Index) and a 4.03% decline for the MSCI USA IMI Extended Real Estate Index (the MSCI Real Estate Index). Some of the Fund’s top performers from 2023 and the first quarter of 2024 experienced declines, partly due to concerns about slowing growth. This includes the shares of homebuilders, residential building product and services companies, casino and gaming operators, certain REITs, and other real estate-related companies. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Baron Real Estate Fund highlighted stocks like Martin Marietta Materials, Inc. (NYSE:MLM) in the second quarter 2024 investor letter. Martin Marietta Materials, Inc. (NYSE:MLM) is a company that manufactures natural resource-based building materials. The one-month return of Martin Marietta Materials, Inc. (NYSE:MLM) was -10.41%, and its shares gained 17.38% of their value over the last 52 weeks. On August 29, 2024, Martin Marietta Materials, Inc. (NYSE:MLM) stock closed at $523.99 per share with a market capitalization of $32.025 billion.
Baron Real Estate Fund stated the following regarding Martin Marietta Materials, Inc. (NYSE:MLM) in its Q2 2024 investor letter:
“In the second quarter, we acquired shares in Martin Marietta Materials, Inc. (NYSE:MLM), a leading producer of aggregates (77% of gross profit) and specialty products. The company’s products are sold and utilized in infrastructure projects such as highways, as well as residential and non-residential construction. Martin Marietta has local leadership positions across its footprint.
We believe aggregates are an attractive business for two main reasons: High barriers to entry limit new competition: Permits to open new quarries are difficult to obtain, and the approval process typically takes 5 to 10 years. Martin Marietta has more than 75 years of aggregates reserves at its current extraction rates. Consistent pricing power through cycles: Aggregates producers have historically enjoyed great pricing power owing to the difficulty in opening competing new quarries, the limited substitutes for quality aggregates, and a high weight-to-price ratio that makes transportation expensive relative to the cost of the material. In the last 30 years, pricing of aggregates has increased, on average, 4% per year…” (Click here to read the full text)
A large construction project with cranes and forklifts in action, demonstrating the company’s building materials business.
Martin Marietta Materials, Inc. (NYSE:MLM) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 45 hedge fund portfolios held Martin Marietta Materials, Inc. (NYSE:MLM) at the end of the second quarter which was 52 in the previous quarter. While we acknowledge the potential of Martin Marietta Materials, Inc. (NYSE:MLM) 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 Martin Marietta Materials, Inc. (NYSE:MLM) and shared the list of best materials stocks to buy according to hedge funds. 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.
