Baron Funds, an investment management firm, released its “Focused Growth Fund” second quarter 2024 investor letter. A copy of the letter can be downloaded here. The fund decreased 0.21% (Institutional Shares) in the second quarter outperforming the Russell 2500 Growth Index’s (the Benchmark) 4.22% decline. It became clear throughout the quarter that the Federal Reserve’s (the Fed) restrictive actions over the previous year were starting to reduce employment, job growth, and inflation. The deceleration of economic growth gave investors hope that the Federal Reserve would begin reducing interest rates as early as this fall. Please spare some time to check the fund’s top 5 holdings to know more about their top bets for 2024.
Baron Focused Growth Fund highlighted stocks like Red Rock Resorts, Inc. (NASDAQ:RRR) in the Q2 2024 investor letter. Headquartered in Las Vegas, Nevada, Red Rock Resorts, Inc. (NASDAQ:RRR) develops and operates casino and entertainment properties. The one-month return of Red Rock Resorts, Inc. (NASDAQ:RRR) was 14.34%, and its shares gained 27.57% of their value over the last 52 weeks. On September 3, 2024, Red Rock Resorts, Inc. (NASDAQ:RRR) stock closed at $56.78 per share with a market capitalization of $5.824 billion.
Baron Focused Growth Fund stated the following regarding Red Rock Resorts, Inc. (NASDAQ:RRR) in its Q2 2024 investor letter:
“Shares of Red Rock Resorts, Inc. (NASDAQ:RRR), an owner and operator of casinos in the Las Vegas Locals market, declined 7.7% in the second quarter and hurt performance by 35 bps. This was due to slower-than-expected growth in the Las Vegas Locals market and greater-than-expected cannibalization of its casinos from the opening of its new Durango casino late last year. The Durango casino is generating strong results that should enable Red Rock to meet its projected 20% return on invested capital, pay down debt, and return to its targeted leverage ratio of 3 times by the end of next year. We believe the new casino combined with continued market growth should generate high single-digit growth in EBITDA and double-digit free cash flow growth over the coming years. Red Rock currently has over 300 acres of gaming-entitled land to develop. Its margins remain above pre-pandemic levels, despite increasing wage costs, thanks to strong incremental margins on revenue generated from its new resort.”
A picturesque sunset view of the Graton Resort & Casino, with patrons gambling in the background.
Red Rock Resorts, Inc. (NASDAQ:RRR) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 17 hedge fund portfolios held Red Rock Resorts, Inc. (NASDAQ:RRR) at the end of the second quarter which was 13 in the previous quarter. Red Rock Resorts, Inc.’s (NASDAQ:RRR) consolidated net revenue for the second quarter of 2024 was $486.4 million, a 16.9% increase over Q2 2023, and adjusted EBITDA was $201.7 million, a 15% increase over the prior year’s quarter. While we acknowledge the potential of Red Rock Resorts, Inc. (NASDAQ:RRR) 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 Red Rock Resorts, Inc. (NASDAQ:RRR) and shared Diamond Hill Small Cap Fund’s views on the company in the previous quarter. 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.
