“Marriott (MAR) remains a strong free cash flow business”
Baron Funds, an asset management company, has released its second quarter 2021 Baron Growth Fund letter to investors – a copy of which can be downloaded here. A quarterly return of 7.80% was generated by the fund’s institutional stocks for the second quarter of 2021, outperforming its main benchmark, the Russell 2000 Growth Index, which reached 4.88%, but below the S&P 500 index which returned 8.55% for the same period. You can check out the top 5 holdings of the fund to get an idea of their top bets for 2021.
In Baron Funds’ Q2 2021 letter to investors, the fund mentioned Marriott International, Inc. (NASDAQ: MAR) and discussed its position on the company. Marriott International, Inc. is a Bethesda, MD-based timeshare accommodation and vacation operator with a market cap of $ 43.9 billion. MAR has returned 2.27% year-to-date, while its 12-month returns are up 30.88%. The stock closed at $ 135.10 per share on August 30, 2021.
Here’s what Baron Funds has to say about Marriott International, Inc. in its Q2 2021 letter to investors:
“Marriott Vacations Worldwide Corp., a timeshare developer and seller, affected investor concerns over the impact of the Delta variant of COVID-19 on leisure travel during the quarter. Equities also came under pressure from the possibility of rising mortgage rates. While both developments are short-term concerns, Marriott Vacations has seen no impact from either as its business is recovering quickly and the securitization market is at its best. Marriott Vacations remains a strong free cash flow business. “
Based on our calculations, Marriott International, Inc. (NASDAQ: MAR) was unable to land a spot on our list of the 30 most popular stocks among hedge funds. MAR was in 49 hedge fund portfolios at the end of the first half of 2021, compared to 58 funds in the previous quarter. Marriott International, Inc. (NASDAQ: MAR) generated a return of -6.76% in the past 3 months.
The reputation of hedge funds as savvy investors has been tarnished over the past decade, as their hedged returns could not keep up with the unhedged returns of stock indices. Our research has shown that small cap hedge fund stock selection managed to beat the market by double digits every year between 1999 and 2016, but the margin for outperformance has shrunk in recent years. Nonetheless, we were still able to identify in advance a select group of hedge funds that have outperformed S&P 500 ETFs by 115 percentage points since March 2017 (see details here). We were also able to identify in advance a select group of hedge funds that underperformed the market by 10 percentage points per year between 2006 and 2017. Interestingly, the margin of underperformance of these stocks has increased in recent years. Investors who are long in the market and short on these stocks would have reported more than 27% per year 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 originally appeared on Insider Monkey.