Baron Funds, an investment management company, released its “Baron Discovery Fund” fourth quarter 2024 investor letter. A copy of the letter can be downloaded here. In the fourth quarter, the fund appreciated 6.20% (Institutional Shares), outperforming the 4.50% return for the Russell 2000 Growth Index. For the year ended December 31, 2024, the fund returned 16.28% compared to the index’s 15.15% return. Given the challenging start in the first half of the year, the fund was pleased with the outperformance of the fund in 2024. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Baron Discovery Fund highlighted stocks like Montrose Environmental Group, Inc. (NYSE:MEG) in the third quarter 2024 investor letter. Montrose Environmental Group, Inc. (NYSE:MEG) is an environmental services company. The one-month return of Montrose Environmental Group, Inc. (NYSE:MEG) was 28.94%, and its shares lost 26.83% of their value over the last 52 weeks. On January 23, 2024, Montrose Environmental Group, Inc. (NYSE:MEG) stock closed at $22.50 per share with a market capitalization of $771.766 million.
Baron Discovery Fund stated the following regarding Montrose Environmental Group, Inc. (NYSE:MEG) in its Q4 2024 investor letter:
“Shares of Montrose Environmental Group, Inc. (NYSE:MEG), a leading environmental services firm, were down due to a multitude of issues and negative news flow. Previously, the stock came under pressure when the U.S. Supreme Court struck down the Chevron Doctrine in July, raising investor concerns about the authority of federal agencies to enforce environmental regulations that drive portions of Montrose’s business. In September, shares sank after a short report targeted the company. Finally, the perception that Montrose will fare worse under the incoming administration due to a reduced focus on regulation also hurt shares. Management has refuted all these points and met with investors to give confidence around their 2025 outlook. They noted the company grew under the prior Trump administration and paused acquisitions in the short term to demonstrate organic revenue growth and cash flow generation, which the short report claimed was lacking. We added to our position on weakness.
We bought more shares of Montrose Environmental Group, Inc. as we believe the company will start to show meaningful free cash flow production in 2025, and that the concern about negative regulatory issues is overstated.”
A biohazard waste disposal team safely transferring contaminated water for treatment.
Montrose Environmental Group, Inc. (NYSE:MEG) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 18 hedge fund portfolios held Montrose Environmental Group, Inc. (NYSE:MEG) at the end of the third quarter which was 17 in the previous quarter. Montrose Environmental Group, Inc.’s (NYSE:MEG) revenues surged to a record $178.7 million in the third quarter of 2024, a 6.4% increase over Q3 2023. While we acknowledge the potential of Montrose Environmental Group, Inc. (NYSE:MEG) 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 Montrose Environmental Group, Inc. (NYSE:MEG) and shared Alger Weatherbie Specialized Growth Fund’s views on the company in the previous quarter. Montrose Environmental Group, Inc. (NYSE:MEG) detracted from Baron Discovery Fund’s performance in the previous quarter. In addition, please check out our hedge fund investor letters Q3 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.