Baron Funds, an investment management company, released its “Baron Discovery Fund” second quarter 2024 investor letter. A copy of the letter can be downloaded here. In the second quarter, the fund (Institutional Shares) declined 7.78% underperforming the 2.92% return for the Russell 2000 Growth Index. The lion’s share of negative attribution and 6.52% of negative performance of the fund during the quarter were attributed to the ten worst-performing equities. The firm believes downward movements are more technically tied to macroeconomic issues and the trading environment and could quickly revert. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Baron Discovery Fund highlighted stocks like Nova Ltd. (NASDAQ:NVMI), in the second quarter 2024 investor letter. Nova Ltd. (NASDAQ:NVMI) designs and develops process control systems used to manufacture semiconductors. The one-month return of Nova Ltd. (NASDAQ:NVMI) was 10.74%, and its shares gained 84.76% of their value over the last 52 weeks. On August 23, 2024, Nova Ltd. (NASDAQ:NVMI) stock closed at $223.01 per share with a market capitalization of $6.478 billion.
Baron Discovery Fund stated the following regarding Nova Ltd. (NASDAQ:NVMI) in its Q2 2024 investor letter:
“Nova Ltd. (NASDAQ:NVMI) is a semiconductor capital equipment company focused on the metrology (measurement) market. The stock rose during the quarter on the expectation that robust growth in chips for AI applications will drive accelerating adoption and growth across Nova’s product portfolio, including specifically high bandwidth memory, advanced packaging, and leading-edge chip production. Nova is the only supplier of materials metrology tools that are increasingly required for leading edge chips. Its superior capabilities in optical inspection tools are driving share gains, and it is also benefiting from adoption of its chemical metrology portfolio (which categorizes material qualities). We believe Nova is well positioned to continue outgrowing underlying wafer fabrication equipment industry trends.”
A technician calibrating a chemical mechanical planarization machine for precise applications.
Nova Ltd. (NASDAQ:NVMI) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 22 hedge fund portfolios held Nova Ltd. (NASDAQ:NVMI) at the end of the second quarter which was 22 in the previous quarter. During the second quarter, Nova Ltd. (NASDAQ:NVMI) experienced an 11% sequential revenue growth and a 28% year-over-year increase. Moreover, the company achieved record profitability. While we acknowledge the potential of Nova Ltd. (NASDAQ:NVMI) 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 Nova Ltd. (NASDAQ:NVMI) and shared Wasatch Small Cap Growth Strategy’s views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q2 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.