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Baron Funds, an asset management firm, published its “Baron Real Estate Fund” third quarter 2021 investor letter – a copy of which can be downloaded here. A modest decline of 1.66% was delivered by the fund’s institutional shares for the third quarter of 2021, marginally underperforming its primary benchmark index, the MSCI USA IMI Extended Real Estate Index (the “MSCI Real Estate Index”), and the MSCI US REIT Index (the “REIT Index”), which increased 0.10% and 0.75%, respectively. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
Baron Funds, in its Q3 2021 investor letter, mentioned Hyatt Hotels Corporation (NYSE: H) and discussed its stance on the firm. Hyatt Hotels Corporation is a Chicago, Illinois-based hospitality company with a $9.1 billion market capitalization. Hyatt delivered a 12.42% return since the beginning of the year, while its 12-month returns are up by 43.10%. The stock closed at $83.47 per share on November 2, 2021.
Here is what Baron Funds has to say about Hyatt Hotels Corporation in its Q3 2021 investor letter:
"Hyatt Hotels Corp.: Following its recent announcement to acquire Apple Leisure Group, a highly desirable independent resort management company with 102 resorts in 10 countries, we reacquired shares in Hyatt, a leading hotel company. We believe this acquisition will accelerate Hyatt’s industry-leading growth by adding a portfolio of resort brands with a large pipeline. Hyatt’s management has also announced its intention to accelerate its transformation to greater fee-based earnings and create additional liquidity by seeking to sell $2 billion of owned hotels in the next three years. We believe the combination of industry-leading growth, hotel asset sales at attractive valuations, and the company’s ongoing transformation to more of an asset-light business will result in an improvement in Hyatt’s valuation and strong shareholder returns."
Based on our calculations, Hyatt Hotels Corporation (NYSE: H) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. Hyatt was in 23 hedge fund portfolios at the end of the first half of 2021. Hyatt Hotels Corporation (NYSE: H) delivered a 10.12% return in the past 3 months.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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Disclosure: None. This article is originally published at Insider Monkey.