Baron Funds, an investment management company, released its “Baron Asset Fund” fourth quarter 2023 investor letter. A copy of the same can be downloaded here. Declining interest rates and investors’ increasing confidence that there won’t be a hard-landing economic recession were both influenced by moderating inflation and improving labor market conditions. This bullish outlook fueled investor risk-taking and a robust equities market surge throughout the quarter. Against this backdrop, the fund gained 12.45% (Institutional Shares) in the fourth quarter underperforming the Russell Midcap Growth Index’s 14.55% return. Headwinds from the Fund’s style biases, particularly its underexposure to equities with elevated beta and residual volatility, as well as the impact of stock selection, contributed to its relative underperformance. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Baron Asset Fund featured stocks such as Birkenstock Holding plc (NYSE:BIRK) in the fourth quarter 2023 investor letter. Based in London, the United Kingdom, Birkenstock Holding plc (NYSE:BIRK) manufactures and sells footwear products. On January 24, 2024, Birkenstock Holding plc (NYSE:BIRK) stock closed at $44.80 per share. One-month return of Birkenstock Holding plc (NYSE:BIRK) was -9.49%, and YTD its shares lost 8.06% of their value. Birkenstock Holding plc (NYSE:BIRK) has a market capitalization of $8.415 billion.
Baron Asset Fund stated the following regarding Birkenstock Holding plc (NYSE:BIRK) in its fourth quarter 2023 investor letter:
“We participated in the initial public offering of Birkenstock Holding plc (NYSE:BIRK). Birkenstock is a global footwear company with roots dating back to 1774. Embedded in American culture since the 1960s, the brand is best known for its iconic Arizona and Boston sandals. Although the Birkenstock brand has existed for more than two centuries, the Birkenstock family brought in its first outside management team, led by Oliver Reichert, in 2009. Under new leadership and vision, the business has been transformed from a family- owned, production-oriented company into a professionally managed enterprise committed to growing the Birkenstock brand globally.
Following the arrival of new management, Birkenstock revenues have grown at a 20% CAGR from fiscal 2014 to fiscal 2022, when the company generated revenues of €1.2 billion with profitability margins in the mid-30% range. We believe this combination of an iconic brand with high growth and industry-leading profitability makes the Birkenstock brand an attractive asset.
Unlike nearly all other footwear brands, Birkenstock manufactures products in-house with over 95% in its German factories. We believe this provides the company with better quality control and less risk in its supply chain. Birkenstock products are sold both direct and through wholesale partners. Wholesale represents roughly 60% of sales through 6,000 selected wholesale partners in approximately 75 countries. The remaining 40% of sales are generated direct-to-consumer, with the vast majority sold through e-commerce. The company has just 45 stores, though they expect to increase that number meaningfully. The American and European markets are most developed, and Asia represents a large, untapped opportunity.
Over the medium term, we believe Birkenstock will be able to increase revenue by 15% per year or more, driven by ongoing growth in its core styles, expanded year-round product mix, new stores, and geographic expansion. We also expect Birkenstock to maintain its industry-leading profitability.”
A shopper browsing the wide selection of trendy footwear in a franchised store.
Birkenstock Holding plc (NYSE:BIRK) is not on our list of 30 Most Popular Stocks Among Hedge Funds. 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.
