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 Prologis, Inc. (NYSE:PLD), in the second quarter 2024 investor letter. Prologis, Inc. (NYSE:PLD) is a global leader in logistics real estate. The one-month return of Prologis, Inc. (NYSE:PLD) was -0.64%, and its shares gained 2.17% of their value over the last 52 weeks. On August 28, 2024, Prologis, Inc. (NYSE:PLD) stock closed at $126.90 per share with a market capitalization of $117.498 billion.
Baron Real Estate Fund stated the following regarding Prologis, Inc. (NYSE:PLD) in its Q2 2024 investor letter:
“The shares of Prologis, Inc. (NYSE:PLD) underperformed during the second quarter. Prologis is a REIT that is the global leader in logistics real estate with a focus on high-barrier, high-growth markets. The share price began to correct in April when the company reported strong first quarter financial results but slightly lowered its full-year outlook. Rent growth has been moderating in the industrial logistics real estate sector as tenants slow their decision- making amidst an environment of heightened macroeconomic uncertainty, while a wave of recently delivered new development projects provide tenants with more real estate options. We view these headwinds as transitory and remain quite optimistic about Prologis’s multi-year growth prospects.
We expect industry fundamentals will firm up in the coming quarters in light of still healthy levels of demand combined with a dearth of expected new development deliveries. Long-term demand is poised to benefit from several ongoing secular tailwinds, including the growth of e-commerce, the build out of “last mile” supply chains, and the desire for more “just-in-case” inventory of goods. Management, who we think is top notch, expects to grow cash flow at close to 10% per year over the next several years as the company resets the portfolio’s low in-place rents up to market levels and investments in development, data centers and energy begin to bear fruit.”
A large logistic facility within the industrial real estate sector.
Prologis, Inc. (NYSE:PLD) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 56 hedge fund portfolios held Prologis, Inc. (NYSE:PLD) at the end of the second quarter which was 48 in the previous quarter. While we acknowledge the potential of Prologis, Inc. (NYSE:PLD) 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 Prologis, Inc. (NYSE:PLD) and shared the list of best real estate and realty stocks to buy according to hedge funds. Third Avenue Management’s Real Estate Value Fund added Prologis, Inc. (NYSE:PLD) to its portfolio during Q2 2024. 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.