Baron Funds, an investment management company, released its “Baron Small Cap Fund” second-quarter 2024 investor letter. A copy can be downloaded here. The fund returned -6.43% (Institutional Shares) in the quarter trailing the Russell 2000 Growth Index’s -2.92 % return and the broader Russell 3000 Index’s 3.22% return. The technology-heavy NASDAQ Composite Index and the broader indices hit record highs in the second quarter. Still, the rally was extremely focused and narrow, with the mega-cap Magnificent Seven’s consistently excellent performance accounting for all of the larger-cap index gains while small-cap stocks declined. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Baron Small Cap Fund highlighted stocks like SiteOne Landscape Supply, Inc. (NYSE:SITE) in its Q2 2024 investor letter. SiteOne Landscape Supply, Inc. (NYSE:SITE) is a wholesale distributor of landscape supplies. The one-month return of SiteOne Landscape Supply, Inc. (NYSE:SITE) was 14.76%, and its shares lost 18.55% of their value over the last 52 weeks. On August 5, 2024, SiteOne Landscape Supply, Inc. (NYSE:SITE) stock closed at $132.71 per share with a market capitalization of $5.988 billion.
Baron Small Cap Fund stated the following regarding SiteOne Landscape Supply, Inc. (NYSE:SITE) in its Q2 2024 investor letter:
“SiteOne Landscape Supply, Inc. (NYSE:SITE) is the largest distributor of wholesale landscape supplies in North America. SiteOne sells irrigation, hardscapes, agronomics, and nursery products to landscapers through its network for residential and commercial maintenance, upgrade/repair, and new construction. Shares fell during the quarter after a negative intra-quarter update, with weaker-than-expected demand in upgrade/repair product categories and stronger-than-expected commodity deflation, which together will likely lead to lower full-year results. We believe SiteOne remains well positioned long term as its investments in operational efficiency, technology, and product category management enable it to continue taking share of the fragmented wholesale landscape supplies distribution industry and improve margins, while expanding its product catalog and geographic footprint through consistent M&A. We visited with the company at their headquarters in Atlanta during the quarter and came away with renewed respect for management and their execution. We believe in their journey to gain significant market share through acquisitions and organic growth and increase margins by about 50% over time, and we believe the stock is now very cheap because of the present softness in their sales.”
A bustling warehouse stocked with irrigation supplies, fertilizer, grass seed, ice melt products, pesticides, and landscape accessories.
SiteOne Landscape Supply, Inc. (NYSE:SITE) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 24 hedge fund portfolios held SiteOne Landscape Supply, Inc. (NYSE:SITE) at the end of the first quarter which was 21 in the previous quarter. In the second quarter of 2024, SiteOne Landscape Supply, Inc. (NYSE:SITE) reported a net sales increase of 4% to $1.41 billion (see the details here). While we acknowledge the potential of SiteOne Landscape Supply, Inc. (NYSE:SITE) 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 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.
