Baron Funds, an investment management company, released its “Baron Opportunity Fund” third quarter 2024 investor letter. A copy of the letter can be downloaded here. In the third quarter, the fund rose 4.04% (Institutional Shares), outperformed the Russell 3000 Growth Index, which gained 3.42%, and lagged the S&P 500 Index, which advanced 5.89%. In the first nine months ended 2024, the fund posted solid gains, rising 25.31% compared to a 24.00% return for the Russell 3000 Growth Index and beating the S&P 500 Index’s 22.08% gain. Due to a significant rotation away from large-cap Magnificent Seven stocks and toward value/cyclical and small-cap stocks, as well as generally positive economic data that supported the soft-landing narrative and the Federal Reserve’s long-awaited dovish pivot, U.S. stocks ended the quarter higher for the fourth consecutive quarter. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2024.
Baron Opportunity Fund highlighted stocks like Atlassian Corporation (NASDAQ:TEAM), in the third quarter 2024 investor letter. Atlassian Corporation (NASDAQ:TEAM) is a company that designs, develops, licenses, and maintains various software products. The one-month return of Atlassian Corporation (NASDAQ:TEAM) was 19.01%, and its shares gained 8.73% of their value over the last 52 weeks. On October 9, 2024, Atlassian Corporation (NASDAQ:TEAM) stock closed at $189.35 per share with a market capitalization of $49.697 billion.
Baron Opportunity Fund stated the following regarding Atlassian Corporation (NASDAQ:TEAM) in its Q3 2024 investor letter:
“Atlassian Corporation (NASDAQ:TEAM) is leading software company focused on the collaboration and productivity markets. The company initially focused on serving software engineers (over 20 million worldwide), but its newer products, features, and use cases address a much larger set of users, including business teams (IT, marketing, project management, and human resources) engaged in product development (over 100 million worldwide) and the much broader group of knowledge workers (over 1 billion globally). The company recently completed a complex three-year migration of its on-premises customers to the cloud. While the complexity of this migration process weighed on shares (down about 50% since 2022), we believe the company is now better positioned to cross-sell new products and expand usage in the existing customer base. We recently met with several senior executives at the company’s offices across multiple cities and attended Atlassian’s annual user conference. At the latter we spoke with dozens of customers and partners and observed a notable improvement in the company’s innovation cadence and customer receptivity to these new innovations versus last year’s conference, including: (i) enhancements to Jira Service Management that simplifies incident management (identifying and remediating customer IT service issues); (ii) Jira Product Discover, that helps teams organize and prioritize projects that align with corporate goals; (iii) new AI capabilities enabling the use of natural language queries to quickly access reliable and relevant information about your organization and tasks; and (iv) Rovo, a search tool that helps teams find information across different applications, learn and iterate on knowledge work, and act faster with virtual agents. While the macro backdrop and related IT budget environment remains fluid, we have greater confidence that growth is bottoming, the company is delivering more products it can sell, and that growth is poised to reaccelerate driving free cash flow margins to expand. Given our increased conviction in their guidance and mid-term targets, and the dislocated valuation (revenue multiple is trending near a 10-year low), we initiated a position in the stock during the quarter.”
A modern software engineering team, huddled around their desks, discussing a software solution.
Atlassian Corporation (NASDAQ:TEAM) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 47 hedge fund portfolios held Atlassian Corporation (NASDAQ:TEAM) at the end of the second quarter which was 51 in the previous quarter. While we acknowledge the potential of Atlassian Corporation (NASDAQ:TEAM) 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 Atlassian Corporation (NASDAQ:TEAM) and shared Baird Chautauqua International and Global Growth Fund’s views on the company. 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.