Baron Funds, an investment management company, released its “Baron Small Cap Fund” fourth-quarter 2024 investor letter. A copy of the letter can be downloaded here. The fund was down 0.99% (Institutional Shares) in the quarter trailing the Russell 2000 Growth Index’s 1.70% return and the broader Russell 3000 Index’s 2.63% return. For the year the Fund was up 13.61% compared to 15.15% and 23.81% returns for the indexes. Although the fund’s performance this year did not surpass the benchmark, its long-term results are significantly better. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Baron Small Cap Fund highlighted stocks like Enpro Inc. (NYSE:NPO) in the fourth quarter 2024 investor letter. Enpro Inc. (NYSE:NPO) engages in the manufacturing of value-added products and solutions to safeguard critical environments. The one-month return of Enpro Inc. (NYSE:NPO) was 9.27%, and its shares gained 18.47% of their value over the last 52 weeks. On January 30, 2024, Enpro Inc. (NYSE:NPO) stock closed at $186.74 per share with a market capitalization of $3.92 billion.
Baron Small Cap Fund stated the following regarding Enpro Inc. (NYSE:NPO) in its Q4 2024 investor letter:
“Enpro Inc. (NYSE:NPO) is a diverse industrial technology company whose proprietary, value-add products and solutions contribute key functionality to and/or safeguard a variety of critical environments. The company underwent meaningful transformation since 2017, having divested over $1 billion in assets and spending close to $1.5 billion on acquisitions to reshape its portfolio to focus on higher growth, margin, and returns businesses with durable long-term moats, resulting in a decreased exposure to heavy-duty trucking and marine end markets and an increased exposure to the semiconductor sector. Over half of revenue today comes from recurring, high margin aftermarket applications across all end markets.
Enpro’s Sealing Technologies (ST) designs, engineers, and manufacturers metallic seals, soft gaskets, wheel-end products, and gas analyzers/sensors sold into general industrial, commercial vehicle, power generation, food & pharmaceutical, aerospace, and petrochemical end markets. The business maintains very high margins due to its industry-leading brand (Garlock is the “Kleenex” of soft gaskets), reliability, and innovation and its products are a small cost relative to the overall operations of its customers and relative to the cost of a potential failure by using a lower-quality competitive product. Above-market growth is driven by pricing power and continuous innovation.”
A close-up shot of a machine operator installing a industrial component inside a factory.
Enpro Inc. (NYSE:NPO) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 17 hedge fund portfolios held Enpro Inc. (NYSE:NPO) at the end of the third quarter which was 14 in the previous quarter. Enpro Inc.’s (NYSE:NPO) third quarter sales of $260.9 million increased 4% compared to the prior year. While we acknowledge the potential of Enpro Inc. (NYSE:NPO) 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 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.