Baron Funds, an investment management company, released its “Baron Discovery Fund” fourth quarter 2024 investor letter. A copy of the letter can be downloaded here. In the fourth quarter, the fund appreciated 6.20% (Institutional Shares), outperforming the 4.50% return for the Russell 2000 Growth Index. For the year ended December 31, 2024, the fund returned 16.28% compared to the index’s 15.15% return. Given the challenging start in the first half of the year, the fund was pleased with the outperformance of the fund in 2024. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Baron Discovery Fund highlighted stocks like The Macerich Company (NYSE:MAC), in the fourth quarter 2024 investor letter. The Macerich Company (NYSE:MAC) is a self-managed, and self-administered real estate investment trust (REIT). The one-month return of The Macerich Company (NYSE:MAC) was -0.10%, and its shares gained 20.62% of their value over the last 52 weeks. On January 23, 2024, The Macerich Company (NYSE:MAC) stock closed at $20.12 per share with a market capitalization of $5.184 billion.
Baron Discovery Fund stated the following regarding The Macerich Company (NYSE:MAC) in its Q4 2024 investor letter:
“This quarter we initiated a new position inThe Macerich Company (NYSE:MAC). Macerich is a REIT that owns a portfolio of 43 exceptionally high-quality malls in the U.S., located in key states such as California, New York, and Arizona.
We are excited about the short- to medium-term prospects for Macerich for four reasons: 1) The fundamental backdrop for high-quality mall real estate remains favorable. Tenant demand remains robust, as a broad-based group of retailers seek to secure space to meet their five- to ten-year growth objectives. In the meantime, there is a shortage of desirable space that is available, since industry occupancy is high and no new mall developments are underway. This demand/supply imbalance is enabling landlords to raise rents. 2) Macerich owns an exceptionally high-quality portfolio of mall real estate. Approximately 90% of the company’s portfolio value is derived from malls graded Class A, which means the properties are well located, highly productive, and appealing to prospective tenants. 3) We see continued growth opportunities for Macerich through increases in occupancy, rents, margins, and redevelopment projects, which should lead to continued cash flow growth. 4) A CEO transition is underway for the first time in decades. Effective March 1, 2024, Jackson Hsieh became President and CEO of Macerich. Jackson most recently served as CEO of net lease REIT Spirit Realty Capital until its acquisition by Realty Income in January 2024. At Spirit, Jackson led a successful turnaround effort to improve overall portfolio quality and simplify the company’s capital structure. We believe Jackson has an opportunity to make similar improvements at Macerich, including selling non-core properties and repaying debt.
At the recent share price, we believe Macerich is valued at a significant discount relative to its closest publicly traded mall peers and relative to recent mall transactions that have taken place in the private market. We anticipate that this valuation discount will narrow or close in the coming years as the company’s turnaround plan progresses.”
An aerial shot of a large real estate investment trust, its properties sprawling across the ground below.
The Macerich Company (NYSE:MAC) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 17 hedge fund portfolios held The Macerich Company (NYSE:MAC) at the end of the third quarter which was 23 in the previous quarter. While we acknowledge the potential of The Macerich Company (NYSE:MAC) 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.