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Will AI Improve the Business of FactSet Research Systems (FDS)?

Baron Funds, an investment management company, released its “Baron FinTech Fund” second quarter 2024 investor letter. A copy of the letter can be downloaded here. In the second quarter, the fund declined 2.25% (Institutional Shares) compared to a (5.78)% return for the FactSet Global FinTech Index (Benchmark) and a 4.28% gain for the S&P 500 index. US equities rose with major market indices reaching all-time highs during the second quarter. Overwhelming corporate results were accompanied by mixed economic data that points to further moderation of inflation. However, the rally was concentrated and driven by mega-cap technology companies. The fund’s smaller market cap profile and lack of exposure to the Magnificent Seven led the fund to underperform the broader market. In addition, please check the fund’s top five holdings to know its best picks in 2024.

Baron FinTech Fund highlighted stocks like FactSet Research Systems Inc. (NYSE:FDS) in the Q2 2024 investor letter. FactSet Research Systems Inc. (NYSE:FDS) is a financial data company, that provides integrated financial information and analytical applications. The one-month return of FactSet Research Systems Inc. (NYSE:FDS) was -10.22%, and its shares lost 6.29% of their value over the last 52 weeks. On August 12, 2024, FactSet Research Systems Inc. (NYSE:FDS) stock closed at $397.04 per share with a market capitalization of $15.103 billion.

Baron FinTech Fund stated the following regarding FactSet Research Systems Inc. (NYSE:FDS) in its Q2 2024 investor letter:

“GenAI has captured the market’s imagination, but it’s still very early in the user adoption of this new technology, and the financial payoff from investments into GenAI models and infrastructure is still unknown. We are focused on investing in strong businesses that will be improved by AI, even if this improvement takes time to materialize. For example, FactSet Research Systems Inc. (NYSE:FDS) recently launched new products that use GenAI to extract insights from earnings call transcripts and to draft portfolio commentary at the click of button, reducing the time and effort needed to write quarterly letters like this. We consider these GenAI advancements to be evolutionary rather than revolutionary, but we continue to closely monitor the impact of new technologies on the fintech industry.”

An investment banker consulting with a customer on their portfolio in a professional setting.

FactSet Research Systems Inc. (NYSE:FDS) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 24 hedge fund portfolios held FactSet Research Systems Inc. (NYSE:FDS) at the end of the first quarter which was 27 in the previous quarter. While we acknowledge the potential of FactSet Research Systems Inc. (NYSE:FDS) 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 FactSet Research Systems Inc. (NYSE:FDS) and shared the list of best alternatives to Bloomberg Terminal in 2024. FactSet Research Systems Inc. (NYSE:FDS) had a negative impact on the performance of the Baron Asset Fund in Q1 2024. In addition, please check out our hedge fund investor letters Q2 2024 page for more investor letters from hedge funds and other leading investors.

READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.

Disclosure: None. This article is originally published at Insider Monkey.

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