Baron Funds, an investment management company, released its “Baron Emerging Markets Fund” fourth quarter 2023 investor letter. A copy of the same can be downloaded here. In the fourth quarter, the fund returned 6.81% (Institutional Shares), compared to a 7.86% return for its principal benchmark, the MSCI EM Index, and a 7.72% return for the MSCI EM IMI Growth Index (the Proxy Benchmark). The fund appreciated 8.29% for the full year, the benchmark returned 9.83%, and the Proxy Benchmark gained 8.09%. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Baron Emerging Markets Fund featured stocks such as PDD Holdings Inc. (NASDAQ:PDD) in the fourth quarter 2023 investor letter. Headquartered in Dublin, Ireland, PDD Holdings Inc. (NASDAQ:PDD) is a multinational commerce group. On February 21, 2024, PDD Holdings Inc. (NASDAQ:PDD) stock closed at $129.76 per share. One-month return of PDD Holdings Inc. (NASDAQ:PDD) was -10.16%, and its shares gained 50.69% of their value over the last 52 weeks. PDD Holdings Inc. (NASDAQ:PDD) has a market capitalization of $172.398 billion.
Baron Emerging Markets Fund stated the following regarding PDD Holdings Inc. (NASDAQ:PDD) in its fourth quarter 2023 investor letter:
“We added to our digitization theme by building a position in PDD Holdings Inc. (NASDAQ:PDD), a leading Chinese e-commerce platform. Founded in 2015, the company has emerged as China’s second largest e-commerce player, capturing approximately 20% market share. In our view, PDD’s competitive moat lies in its team purchase model that facilitates bulk buying through direct partnerships with manufacturers, thereby eliminating intermediaries (e.g., distributors and middlemen) and lowering costs. Key factors driving the company’s meteoric growth include rising consumer demand for affordable products in China amid an economic slowdown, small-scale merchants seeking alternatives to Alibaba, and superior management execution. PDD’s revenue growth outpaces gross merchandize value growth owing to rising take rates as merchants aggressively compete for consumer traffic on the platform. In our view, PDD should continue to gain market share given its dominance in the value-for-money segment, growing affordable branded product offerings, and high operational efficiency. We believe the company’s growth will be further supported by the recent launch of its international e-commerce platform, Temu, which has become one of the fastest growing apps globally. Leveraging China’s excess manufacturing capacity, Temu has strong negotiating power with domestic suppliers and attracts global consumers with competitively priced products. Temu’s recent initiatives to improve unit economics, coupled with achieving variable breakeven in the sizable U.S. market, showcase management’s skill and commitment to sustained growth. We expect PDD to at least double its earnings and free cash flow in the next three years, with the potential for continued compounding thereafter.”
A close-up of a customer using the company’s e-commerce platform whilst shopping online.
PDD Holdings Inc. (NASDAQ:PDD) is not on our list of 30 Most Popular Stocks Among Hedge Funds. At the end of the fourth quarter, PDD Holdings Inc. (NASDAQ:PDD) was held by 71 hedge fund portfolios, up from 66 in the previous quarter, according to our database.
We discussed PDD Holdings Inc. (NASDAQ:PDD) in another article and shared the list of best Chinese stocks to buy. In addition, please check out our hedge fund investor letters Q4 2023 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.
