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 Vertiv Holdings Co (NYSE:VRT), in the fourth quarter 2024 investor letter. Vertiv Holdings Co (NYSE:VRT) designs, manufactures, and services critical digital infrastructure technologies and life cycle services for data centers, communication networks, and commercial and industrial environments. The one-month return of Vertiv Holdings Co (NYSE:VRT) was -3.13%, and its shares gained 92.73% of their value over the last 52 weeks. On January 30, 2024, Vertiv Holdings Co (NYSE:VRT) stock closed at $114.60 per share with a market capitalization of $43.014 billion.
Baron Small Cap Fund stated the following regarding Vertiv Holdings Co (NYSE:VRT) in its Q4 2024 investor letter:
“Vertiv Holdings Co (NYSE:VRT), a critical digital infrastructure solutions provider for data centers, continued to perform well. With a leading market share in power and cooling applications for data centers, Vertiv is seen as a prime beneficiary of the AI-related data center buildout. At its November Analyst Day, Vertiv raised organic sales guidance to 12% to 14% CAGR for the next five years and gave guidance of 16% to 18% organic revenue growth for 2025. Vertiv also increased its target adjusted operating profit margin from 20% to 25%. While impressive on their own, these forecasts can prove conservative we think. With the stock up 141% in 2024, we have been trimming the stock into strength to manage position size but hold a large stake as we believe in its growth and that the stock is reasonably valued even after great appreciation the last two years.”
A close-up of a group of technicians working on complex data center systems.
Vertiv Holdings Co (NYSE:VRT) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 91 hedge fund portfolios held Vertiv Holdings Co (NYSE:VRT) at the end of the third quarter which was 92 in the previous quarter. While we acknowledge the potential of Vertiv Holdings Co (NYSE:VRT) 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 Vertiv Holdings Co (NYSE:VRT) and shared Coatue’s most important AI stocks. Vertiv Holdings Co (NYSE:VRT) boosted Baron Small Cap Fund’s performance in Q3 2024, as the stock rebounded due to investor confidence in AI data center expansion. 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.