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Baron Funds, an asset management firm, published its “Baron Small Cap Fund” first quarter 2022 investor letter – a copy of which can be downloaded here. Baron Small Cap Fund (the "Fund") did poorly in the first quarter, on both an absolute and relative basis. The Fund was down 15.68% (Institutional Shares), trailing the Russell 2000 Growth Index, which lost 12.63%, and the S&P 500 Index, which fell 4.60%. The Fund's longer-term performance is still admirable gaining 10.76% per year, on an annualized basis, over its almost 25-year history and besting the returns of its benchmark index for all relevant time periods. Try to spend some time looking at the fund’s top 5 holdings to be informed about their best picks for 2022.
In its Q1 2022 investor letter, Baron Small Cap Fund mentioned Installed Building Products, Inc. (NYSE:IBP) and explained its insights for the company. Founded in 1977, Installed Building Products, Inc. (NYSE:IBP) is a Columbus, Ohio-based installation contractor with a $2.5 billion market capitalization. Installed Building Products, Inc. (NYSE:IBP) delivered a -37.65% return since the beginning of the year, while its 12-month returns are down by -25.21%. The stock closed at $87.11 per share on May 19, 2022.
Here is what Baron Small Cap Fund has to say about Installed Building Products, Inc. (NYSE:IBP) in its Q1 2022 investor letter:
"Installed Building Products, Inc. (NYSE:IBP), the leading installer of insulation and complementary products for the residential housing industry, fell in the quarter over concerns that rising interest rates would change the housing outlook. IBP reported good results, featuring strong organic sales, a record year of acquisitions, positive price/mix and a robust demand environment. However, profit margins were negatively affected by continued supply-chain challenges, primarily the lack of availability of spray foam. But as mortgage rates have climbed toward 5%, the stock is trading like the party is over. We don't think it is. We believe this will be a strong year for IBP, since backlogs of homes already sold is so high, and completions will continue to grow. The outlook is foggy for next year and beyond, but we think that, even if housing development stalls, or home prices stop escalating because of higher rates, housing demand will remain strong due to a substantial lack of inventory. The stock has traded down to around 8 times our estimate for this year's EBITDA, which is cheap. Management agrees and has installed an opportunistic repurchase plan."
Our calculations show that Installed Building Products, Inc. (NYSE:IBP) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Installed Building Products, Inc. (NYSE:IBP) was in 15 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 15 funds in the previous quarter. Installed Building Products, Inc. (NYSE:IBP) delivered a -17.70% return in the past 3 months. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.
Disclosure: None. This article is originally published at Insider Monkey.