Baron Funds, an investment management company, released its “Baron Discovery Fund” second quarter 2023 investor letter. A copy of the same can be downloaded here. The fund was up 3.58% (Institutional Shares) in the second quarter trailing the Russell 2000 Growth Index’s 7.05% return. Year-to-date, the fund returned 15.19% (Institutional Shares) compared to a 13.55% return for the benchmark. The macroeconomic landscape remains complicated, and the market’s general tendency is toward fear rather than greed. Nonetheless, the firm remains hopeful that the market has bottomed and that an economic recovery is starting. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Baron Discovery Fund highlighted stocks like Definitive Healthcare Corp. (NASDAQ:DH) in the second quarter 2023 investor letter. Headquartered in Framingham, Massachusetts, Definitive Healthcare Corp. (NASDAQ:DH) offers software as a service (SaaS) healthcare commercial intelligence platform. On August 18, 2023, Definitive Healthcare Corp. (NASDAQ:DH) stock closed at $9.90 per share. One-month return of Definitive Healthcare Corp. (NASDAQ:DH) was -13.01%, and its shares lost 51.45% of their value over the last 52 weeks. Definitive Healthcare Corp. (NASDAQ:DH) has a market capitalization of $1.091 billion.
Baron Discovery Fund made the following comment about Definitive Healthcare Corp. (NASDAQ:DH) in its second quarter 2023 investor letter:
“We added to our position in Definitive Healthcare Corp. (NASDAQ:DH), a commercial intelligence software provider for health care companies. Shares of the company traded down meaningfully in the fourth quarter of 2022 after management highlighted intensifying macro headwinds and lowered expected 2023 growth from the mid-20% range to the mid-teens. As we continued our due diligence and moved further through the macro environment, we became more comfortable with the valuation of the company (shares are trading at a free-cash-flow multiple that implies far lower growth) and with the conservatism of guidance. Plus the company has a cash-rich balance sheet and free cash-flow margins of 28%. As we thought that the sell-off was overdone, we added to our position. Also, during this period the company has enhanced its overall competitive position with new database purchases and increased usage of analytics and AI to improve the usability and applicability of its data to health care industry customers.
Like the guidance given by Definitive Healthcare, management wanted to be conservative in an uncertain macro environment and accounted for slower sales cycles at its customers. Despite the lower guidance, our longer-term view of the company’s strategic opportunities remains unchanged. Our purchases after the initial guidance disappointment now look timely as shares have rallied after the company reported better-than-expected March 2023 earnings and raised full-year guidance.”
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Definitive Healthcare Corp. (NASDAQ:DH) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 8 hedge fund portfolios held Definitive Healthcare Corp. (NASDAQ:DH) at the end of second quarter which was 11 in the previous quarter.
We discussed Definitive Healthcare Corp. (NASDAQ:DH) in another article and shared Baron Discovery Fund’s views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q2 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.
