Baron Funds, an investment management company, released its “Baron Small Cap Fund” third-quarter 2024 investor letter. A copy of the letter can be downloaded here. The fund returned 9.68% (Institutional Shares) in the quarter outperforming the Russell 2000 Growth Index’s 8.41% return and the broader Russell 3000 Index’s 6.23% return. For the first nine months of 2024, the Fund is up 14.74% compared to 13.22% and 20.63% returns for the indexes. In contrast to the narrow market leadership of previous periods, the market rally during the quarter saw strong performance across a broad range of sectors and market capitalization. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Baron Small Cap Fund highlighted stocks like Ibotta, Inc. (NYSE:IBTA) in its Q3 2024 investor letter. Ibotta, Inc. (NYSE:IBTA) is a technology company that enables consumer packaged goods brands to deliver digital promotions to consumers through the Ibotta Performance Network (IPN). The one-month return of Ibotta, Inc. (NYSE:IBTA) was -10.00%, and its shares gained 27.03% of their value over the last three months. On November 20, 2024, Ibotta, Inc. (NYSE:IBTA) stock closed at $63.44 per share with a market capitalization of $1.744 billion.
Baron Small Cap Fund stated the following regarding Ibotta, Inc. (NYSE:IBTA) in its Q3 2024 investor letter:
“Ibotta, Inc. (NYSE:IBTA) stock traded down in the quarter, due to short-term headwinds (primarily in display advertising, which is not an area of focus for the company). We retain conviction that Ibotta will remain the leader in consumer rewards and incentives, with multiple drivers to reach greater than 20% revenue growth per year and strong incremental profitability. Beyond continued initiatives in ramping their partnership with Walmart, Ibotta announced a partnership with Instacart, which validates our belief that Ibotta can be the aggregated platform for consumer incentives. We believe there is a strong pipeline of retailers and brands to join the Ibotta ecosystem. As a result, we added to our Ibotta position when the stock was trading at around 7 times next year’s EV/EBITDA, which we think is inexpensive for a market leader with a strong financial profile.”
A businesswoman using her mobile device to shop on a ecommerce platform.
Ibotta, Inc. (NYSE:IBTA) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 17 hedge fund portfolios held Ibotta, Inc. (NYSE:IBTA) at the end of the third quarter which was 22 in the previous quarter. Ibotta, Inc. (NYSE:IBTA) generated revenue of $98.6 million in the third quarter, representing non-GAAP revenue growth of 19% year over year. While we acknowledge the potential of Ibotta, Inc. (NYSE:IBTA) 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 Ibotta, Inc. (NYSE:IBTA) and shared the list of best IPO stocks to buy heading into 2025. Baron Small Cap Fund initiated a position in Ibotta, Inc. (NYSE:IBTA) in its April IPO. 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.