Installed Building Products (IBP) Rose From Depressed Levels in Q1
Baron Funds, an investment management company, released its “Baron Small Cap Fund” first-quarter 2023 investor letter. A copy of the same can be downloaded here. The fund was 9.44% up in the first quarter outperforming the Russell 2000 Growth Index and the S&P 500 Index which returned 6.07% and 7.50% respectively. During the quarter, the fund benefitted from positive stock selection in almost all sectors on a relative basis. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Baron Small Cap Fund highlighted stocks like Installed Building Products, Inc. (NYSE:IBP) in the first quarter 2023 investor letter. Based in Columbus, Ohio, Installed Building Products, Inc. (NYSE:IBP) engages in installing insulation for the residential new construction market. On June 12, 2023, Installed Building Products, Inc. (NYSE:IBP) stock closed at $120.80 per share. One-month return of Installed Building Products, Inc. (NYSE:IBP) was 6.93%, and its shares gained 42.81% of their value over the last 52 weeks. Installed Building Products, Inc. (NYSE:IBP) has a market capitalization of $3.431 billion.
Baron Small Cap Fund made the following comment about Installed Building Products, Inc. (NYSE:IBP) in its first quarter 2023 investor letter:
"Installed Building Products, Inc. (NYSE:IBP) is a leading installer of insulation and other building products for the residential housing end market. Like Floor & Decor, IBP’s shares rose this quarter from depressed levels, as the company reported strong current results and forecasted that business would remain firm even in the face of higher interest rates. IBP had an incredible year in 2022, with revenues up 36% and EBITDA up 54%. Margins expanded 280 basis points, and management returned $200 million to shareholders via dividends and share repurchases. Still, the stock traded down to about 11 times earnings and 7 times EBITDA over fear of a much tougher environment ahead. Though housing starts have declined with the rise in interest rates, we now believe that IBP can have about flat earnings in 2023, and then revert to growth. The company has been public for nearly a decade and has an impressive record of revenue growth at 20% per year and EBITDA growth of 40% per year over that period. From a combination of organic growth and accretive acquisitions, we underwrite about 15% growth per year go forward from this higher base. Even after the rise this year, the stock is cheap on our near-term estimates and trades about 4 times our projection of EPS in 5 years."
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Installed Building Products, Inc. (NYSE:IBP) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 26 hedge fund portfolios held Installed Building Products, Inc. (NYSE:IBP) at the end of first quarter 2023 which was 20 in the previous quarter.
We discussed Installed Building Products, Inc. (NYSE:IBP) in another article and shared Carillon Tower Advisers' views on the company. In addition, please check out our hedge fund investor letters Q1 2023 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.
