<div class="subscription-widget-wrap-editor"><div class="subscription-widget show-subscribe"><div class="preamble"><p class="cta-caption">Thanks for reading Stock Analysis Compilation! Subscribe for free to receive new posts and support my work.</p></div><form class="subscription-widget-subscribe"><input class="email-input" name="email" tabindex="-1" type="email" /><input class="button primary" type="submit" value="Subscribe" /><div class="fake-input-wrapper"><div class="fake-input"></div><div class="fake-button"></div></div></form></div></div><p><em>Don't hesitate to send me any interesting research you come across.</em></p><p><em>You can also follow me on Twitter <strong><a href="https://twitter.com/StockCompil">@StockCompil</a></strong></em></p><p><strong>This article may be truncated by some email providers, so I suggest you read it directly on Substack for a better reading experience.</strong></p><div><hr /></div><h3><strong>Baron Focused Growth Fund on Airbnb, Inc. $ABNB US</strong></h3><p><strong>Thesis:</strong><br />Airbnb, Inc. is a strong investment opportunity due to its robust brand, continued double-digit revenue growth, impressive margins, and attractive valuation compared to its peers despite potential industry challenges.</p><p><strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">Source</a></strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">: link here.</a></p><p><strong>Analysis:</strong><br />In the third quarter, we initiated a new position in Airbnb, Inc., the leader in the management and operation of vacation rentals and hotels on their proprietary platform. The company has an incredible brand and benefits in both upcycles with strong demand, and downcycles through an increase in supply as owners look to rent their places for additional income. Despite concerns about slower travel growth from peak levels, the company continues to grow at a double-digit rate in revenue despite worries about a consumer slowdown and is now leaning in with increased marketing to grow internationally where it remains underpenetrated.</p><p>The company is still generating 35% EBITDA margins and 40% free cash flow margins with a strong balance sheet that remains in a net cash position. It is still founder-led with the three founders owning over 30% of the business. However, the company now trades at the same valuation as hoteliers despite growing faster with a less capital-intensive business and stronger cash conversion of its revenue. We believe valuation remains attractive at current levels.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Polen Capital on Applied Industrial Technologies $AIT US</strong></h3><p><strong>Thesis:</strong><br />Applied Industrial Technologies is a leading industrial distributor with strong capital allocation and expected low-double-digit earnings growth across diverse markets.</p><p><strong><a href="https://www.polencapital.com/sites/default/files/Polen_US-SMID-Company-Growth_Commentary.pdf">Source</a></strong><a href="https://www.polencapital.com/sites/default/files/Polen_US-SMID-Company-Growth_Commentary.pdf">: link here.</a></p><p><strong>Analysis:</strong><br />Applied Industrial Technologies is a leading industrial distributor of parts and services across diversified end markets including manufacturing, food & beverage, oil & gas, life sciences, and chemicals. The company operates 500 service centers, providing aftermarket parts and a significant services component.</p><p>We find the company compelling not only as it appears to be a superior operator but also due to its impressive capital allocation track record and returns on capital. Overall, we expect Applied Industrial Technologies to become a low-double-digit earnings growth business with a narrower range of outcomes and added value creation from capital allocation.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Baron Opportunity Fund on Atlassian Corporation Plc $TEAM US</strong></h3><p><strong>Thesis:</strong><br />Atlassian Corporation Plc is a leading software company that, after successfully migrating to the cloud, is well-positioned to cross-sell innovative products to a broader user base, anticipating growth despite a challenging macro environment.</p><p><strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">Source</a></strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">: link here.</a></p><p><strong>Analysis:</strong><br />Atlassian Corporation Plc is a leading software company focused on the collaboration and productivity markets. Initially serving software engineers (over 20 million worldwide), its newer products and features address a much larger set of users, including IT, marketing, and HR teams, and the broader group of knowledge workers (over 1 billion globally).</p><p>The company recently completed a complex three-year migration of its on-premises customers to the cloud. While this process weighed on shares (down about 50% since 2022), the company is now better positioned to cross-sell new products and expand usage in the existing customer base. At its annual user conference, we observed notable improvements in innovation cadence and customer receptivity to new products, such as Jira Service Management, Jira Product Discover, and AI capabilities.</p><p>Despite a fluid macro backdrop, we believe growth is bottoming, the company is delivering more products it can sell, and growth is poised to reaccelerate, driving free cash flow margins to expand. Given the dislocated valuation, we initiated a position during the quarter.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Alluvial on Bahnhof AB $BAF SW</strong></h3><p><strong>Thesis:</strong><br />Bahnhof AB is a highly efficient Swedish internet service provider with impressive revenue growth and negative working capital that supports its investment needs.</p><p><strong><a href="https://alluvialcapital.com/wp-content/uploads/2024/10/Alluvial-Capital-Management-Q3-2024-Letter-to-Partners.pdf">Source</a></strong><a href="https://alluvialcapital.com/wp-content/uploads/2024/10/Alluvial-Capital-Management-Q3-2024-Letter-to-Partners.pdf">: link here.</a></p><p><strong>Analysis:</strong><br />Bahnhof is a Swedish internet service provider that has consistently won awards for speed, service, and privacy protections. Revenues have grown at an incredible 20% annual pace over the last 15 years, while operating income has grown at 27% annually.</p><p>The company is startlingly efficient with its capital. Its negative working capital cycle allows Bahnhof to collect payments from customers months before suppliers are paid, generating balance sheet cash to fund 75% of its capital expenditures over the last decade.</p><p>Despite trading at 23x earnings, we view Bahnhof as a compelling investment given its track record, potential to continue compounding growth at a mid-teens pace, and undervaluation relative to its quality and growth prospects.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Polen Capital on Booz Allen Hamilton $BAH US</strong></h3><p><strong>Thesis:</strong><br />Booz Allen Hamilton is a trusted management and consulting firm for U.S. government clients, expected to deliver low-teens earnings growth and mid-teens returns through its strategic services and recent price weakness.</p><p><strong><a href="https://www.polencapital.com/sites/default/files/Polen_US-SMID-Company-Growth_Commentary.pdf">Source</a></strong><a href="https://www.polencapital.com/sites/default/files/Polen_US-SMID-Company-Growth_Commentary.pdf">: link here.</a></p><p><strong>Analysis:</strong><br />Booz Allen Hamilton provides management and consulting services to U.S. government clients across civil, defense, and intelligence departments. It has developed a reputation for delivering high-quality services and advice on the government's most pressing missions.</p><p>Recent price weakness provided an opportunity to initiate a position. We believe the company will deliver low-teens earnings growth with a narrow range of outcomes, driving mid-teens returns with disciplined capital allocation.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Baron Opportunity Fund on Broadcom Inc. $AVGO US</strong></h3><p><strong>Thesis:</strong><br />Broadcom Inc. is poised for strong revenue and earnings growth as it partners with hyperscalers to develop custom AI accelerator chips, while also benefiting from VMware's performance and an early recovery in its non-AI semiconductor business.</p><p><strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">Source</a></strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">: link here.</a></p><p><strong>Analysis:</strong><br />We continued to build our position in Broadcom Inc., a global technology leader that designs, develops, and supplies a broad range of semiconductor and infrastructure software solutions. As AI continues to proliferate, we believe hyperscalers—such as Meta, Microsoft Azure, Google Cloud, and Amazon Web Services—will increasingly deploy custom accelerator chips for their AI workloads, as these are more cost-effective and energy-efficient than general-purpose GPUs.</p><p>Broadcom has a leading position in this space, with its AI customer accelerator business up 3.5x year-over-year and a goal of at least $8 billion in custom accelerator revenues for this fiscal year. Additionally, VMware continues to outperform expectations as Broadcom implements a product simplification and subscription revenue model strategy. Furthermore, the early recovery in its cyclical non-AI semiconductor business is an added tailwind. Combined, these factors are expected to drive strong revenue and earnings growth over the next several years.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Baron Real Estate Fund on Caesars Entertainment, Inc. $CZR US</strong></h3><p><strong>Thesis:</strong><br />Caesars Entertainment, Inc. is a highly discounted casino-entertainment company with strong long-term growth prospects and an optimistic outlook for Las Vegas and its online betting operations.</p><p><strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">Source</a></strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">: link here.</a></p><p><strong>Analysis:</strong><br />In the most recent quarter, we acquired shares in Caesars Entertainment, Inc., the largest casino-entertainment company in the U.S. and one of the world’s most diversified casino-entertainment providers. We are big fans of CEO Tom Reeg and remain optimistic about the long-term prospects for the company.</p><p>The company operates primarily under the Caesars, Harrah’s, Horseshoe, and Eldorado brand names. The company generates approximately 50% of its cash flow from Las Vegas and 50% of its cash flow from regional destination markets. The company owns approximately half of its real estate and leases the other half from gaming REIT companies—Gaming and Leisure Properties, Inc. and VICI Properties Inc.</p><p>We believe currently soft business conditions are reflected in the company’s valuation. At its recent price of only $42 per share, the shares are highly discounted at only 8 times enterprise value to cash flow, a mid-teens free cash flow yield, and our assessment of fair value of more than $70 per share or more than 65% above its current price.</p><p>Further, we remain optimistic about the long-term prospects for Caesars for the following reasons:</p><ul><li><p>We are optimistic about the long-term prospects for Las Vegas, which represents approximately 50% of Caesars’ cash flow. We believe that Las Vegas has structurally changed and now has a year-round business and event calendar that has effectively eliminated off-peak months or lulls in business activity.</p></li><li><p>Management remains focused on improving its balance sheet and believes there is a path to lowering its current lease-adjusted net debt to cash flow from approximately 5.5 times to less than 4 times through cash flow generated from asset sales and the company’s business operations.</p></li><li><p>The company has an online sports betting and casino business that management believes will turn profitable and generate more than $500 million of cash flow by 2025.</p></li><li><p>Additional positive catalysts could propel the shares higher, including reduced capital expenditures and cash interest expenses starting in 2025, leading to further cash flow generation. The company also plans to sell non-core real estate assets and acquire shares in its highly discounted stock.</p></li></ul><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Baron International Growth Fund on CATL $300750 CH</strong></h3><p><strong>Thesis:</strong><br />CATL is the world's largest manufacturer of rechargeable lithium-ion batteries for EVs and ESSs, with a strong market position, competitive advantages, and expected 20% earnings growth in the medium term.</p><p><strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">Source</a></strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">: link here.</a></p><p><strong>Analysis:</strong><br />CATL, headquartered in China, is the world’s largest manufacturer of rechargeable lithium-ion batteries for EVs and Energy Storage Systems (ESSs). The company is the global leader in the development of high energy density performance batteries with technology leadership in superfast charging, creating strong pricing power for its products. Adding to its competitive moat, CATL has a lower cost structure versus peers owing to its vast scale of operations (over 35% global market share in EV batteries), higher capacity utilization, and superior supply-chain management, including vertical integration of certain raw materials.</p><p>In addition to its dominant positioning in China, the company also has a solid track record with global original equipment manufacturers (ex-China) including Tesla, BMW, Stellantis, and Mercedes and, in our view, is well positioned to gain market share in Europe with the buildout of local manufacturing facilities. We are bullish on growth for EV/ESS batteries and expect the company to deliver at least 20% compound earnings growth in the medium term, while maintaining industry leading return on equity and gross margins of 25%.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Baron International Growth Fund on China Mengniu Dairy Co. Ltd. $2319 HK</strong></h3><p><strong>Thesis:</strong><br />China Mengniu Dairy Co. Ltd. is a leading dairy company in China expected to gain market share and enhance shareholder returns, benefiting from stabilizing raw milk prices and attractive valuation amid skepticism towards consumer stocks.</p><p><strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">Source</a></strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">: link here.</a></p><p><strong>Analysis:</strong><br />Adding to our EM consumer theme, we initiated a position in China Mengniu Dairy Co. Ltd., a leading player in China’s dairy industry with strong brand recognition. As a vertically integrated dairy conglomerate, owning a substantial share of China’s scaled dairy farms, Mengniu benefits from high barriers to entry. The liquid milk market in China has been under pressure for the past three years due to weak demand and an oversupply of raw milk. However, we expect raw milk prices to stabilize and recover from 2025 onwards, owing to upstream capacity rationalization.</p><p>As a result, we anticipate competitive intensity to moderate as higher raw milk prices put smaller/regional players at a disadvantage versus larger, vertically integrated producers such as Mengniu. In such a scenario, we expect Mengniu to gain market share and benefit from rising downstream prices given its strong brand recall and ability to pass on inflation to the end customer. In our view, the extreme skepticism regarding Chinese consumer stocks created an attractive entry point, with Mengniu trading at a single-digit earnings multiple – the lowest valuation in its history – and offering a greater than 5% dividend yield at the time of our purchase. We expect Mengniu to continue outperforming the industry while enhancing shareholder returns.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Bell AM on Core & Main $CNM US</strong></h3><p><strong>Thesis:</strong><br />Core & Main is a mid-cap US industrial company well-positioned for growth through market share gains, mergers, and attractive valuation, promising solid double-digit earnings growth.</p><p><strong><a href="https://cdn.prod.website-files.com/61009b51dbefd53113bfe3dd/6736b3f72910c4da4faf2872_BGEF%20Wholesale%20Fund%20Monthly%20Report%20-%20October%202024.pdf">Source</a></strong><a href="https://cdn.prod.website-files.com/61009b51dbefd53113bfe3dd/6736b3f72910c4da4faf2872_BGEF%20Wholesale%20Fund%20Monthly%20Report%20-%20October%202024.pdf">: link here.</a></p><p><strong>Analysis:</strong><br />One of the new names introduced was mid-cap US industrial company Core & Main, a leading distributor of water, wastewater, storm drainage, and fire protection products and related services to municipalities, private water companies, and professional contractors. The company is well positioned to continue gaining market share via organic growth, due to their scale and high-quality service, along with consolidating a very fragmented market through bolt-on M&A deals.</p><p>We expect mid-to-high single digit revenue growth and margin expansion to drive solid double-digit earnings growth for the foreseeable future. With shares pulling back recently, we were able to enter the name at an attractive valuation of ~18x forward P/E ratio, which offers very good shareholder return potential in the coming years.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Baron Asset Fund on Duolingo, Inc. $DUOL US</strong></h3><p><strong>Thesis:</strong><br />Duolingo, Inc. is a leading language learning app with exceptional user engagement, strong growth metrics, and promising upcoming AI-driven product enhancements that position it for further market expansion.</p><p><strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">Source</a></strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">: link here.</a></p><p><strong>Analysis:</strong><br />We also initiated a small position in Duolingo, Inc., the world’s leading language learning app with over 100 million monthly active users. The app has achieved remarkable levels of user engagement by effectively “gamifying” the otherwise tedious process of learning a foreign language. The company has maintained impressive levels of user growth (daily active user growth greater than 50%) and revenue growth (40%-plus), executed well against its new product roadmap, and achieved impressive 40%-plus incremental margins.</p><p>We believe the management team is best in class, very technically capable (CEO and CTO both have PhDs in machine learning from Carnegie Mellon University), and product focused. We imagine several material upcoming catalysts, including the broader launch of its AI tier (Max) that allows users to have real-time conversations with AI-based characters, and a substantial improvement of its Advanced English offering. We believe that these two initiatives will allow Duolingo to effectively address the broader worldwide market of 1.8 billion people currently learning English. As these new products roll out, we believe they should allow Duolingo to achieve higher pricing per user and lower customer churn. Additionally, we see opportunities for the company to expand into related educational markets, such as Math and Music.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Baron Emerging Markets Fund on E Ink $8069 TT</strong></h3><p><strong>Thesis:</strong><br />E Ink is the leading supplier of ePaper technology with a 95% market share, benefiting from growth in electronic shelf labels and potential expansion into large displays, promising mid-teens total shareholder returns over the next 3-5 years.</p><p><strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">Source</a></strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">: link here.</a></p><p><strong>Analysis:</strong><br />E Ink, headquartered in Taiwan, is the inventor and leading supplier of ePaper technology, with over 95% global market share. Made up of millions of tiny microcapsules containing positively and negatively charged particles, ePaper mimics the appearance and readability of traditional ink on paper. Unlike liquid crystal display (LCD), which uses a backlight, ePaper reflects external light, allowing for readability in direct sunlight, lighter weight, and much higher energy efficiency.</p><p>E-Readers, such as Kindle, were the initial major end market for ePaper; however, the Electronic Shelf Label (ESL) end market has proven to be a game-changer, driving a second leg of growth and already accounting for a majority of profit, and representing the company's major long-term growth driver. ESLs provide retailers with several advantages over traditional paper price labels, including a significant reduction in labor costs and paper consumption, higher efficiency in product restocking, and the flexibility to dynamically adjust prices.</p><p>While global ESL penetration is currently low, we anticipate an accelerating rate of adoption over the next 5 to 10 years, as ESL unit prices have declined dramatically and industry leaders, such as Walmart, are indicating strong returns on their early investments. We are also optimistic about the emergence of large size displays, such as outdoor advertising billboards, as a new application for ePaper, with a potential revenue opportunity that ultimately exceeds that of ESLs. We believe that E Ink will maintain its dominant market share, thanks to its technological advantages, rich patent portfolio, manufacturing expertise, and extensive industry partnerships. We expect the company to deliver a compound total shareholder return in the mid-teens over the next three to five years.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Baron Real Estate Fund on Equinix $EQIX US</strong></h3><p><strong>Thesis:</strong><br />Equinix is well-positioned for long-term growth with strong demand, pricing power, and favorable market conditions, potentially compounding earnings per share at around 10% while offering compelling shareholder returns.</p><p><strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">Source</a></strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">: link here.</a></p><p><strong>Analysis:</strong><br />We continue to be optimistic about the long-term growth prospects for the company due to its interconnection focus among a highly curated customer ecosystem, irreplaceable global footprint, strong demand and pricing power, favorable supply backdrop, and evolving incremental demand vectors such as AI.</p><p>The company has multiple levers to drive outsized bottom-line growth with operating leverage. Equinix should compound its earnings per share at approximately 10% over the next few years, and we believe the prospects for outsized shareholder returns remain compelling from here given the superior secular growth prospects combined with a discounted valuation.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Baron Small Cap Fund on GCM Grosvenor Inc. $GCMG US</strong></h3><p><strong>Thesis:</strong><br />GCM Grosvenor Inc. is a resilient alternative asset manager with $79 billion AUM, strong growth potential, and significant upside due to its discount valuation and experienced management, aiming to double fee-related earnings over the next five years.</p><p><strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">Source</a></strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">: link here.</a></p><p><strong>Analysis:</strong><br />"We initiated a position in **GCM Grosvenor Inc.** in the quarter. Grosvenor is an alternative asset manager with $79 billion in assets under management (AUM), which is invested in both Private Markets ($56 billion) and hedge funds ($23 billion). Grosvenor has a 53-year history of supporting clients with their investments in alternatives, a secular growth area within financial services. Due to the long duration nature of these investments, capital is generally committed for 5 to 10 years. This creates a highly resilient earnings model, helped further by client reinvestments, which are typically 30% higher than the prior commitment. </p><p>Grosvenor helps its clients to access, choose, and manage these investments. This requires specialized expertise due to the fragmentation of the alternatives industry, the illiquid nature of these assets, and LPs lacking the necessary scale to build this talent and effectively diligence managers and investments for themselves. Grosvenor has particular strengths in infrastructure and sustainable investing, with each growing AUM at a 20%-plus CAGR over the past 3.5 years. </p><p>We think Grosvenor is a high-quality business with durable earnings, secular growth tailwinds, and further margin expansion opportunities, led by a management team with significant skin in the game (CEO owns over 35% of the company). We believe Grosvenor can double fee-related earnings and EPS over the next 5 years and, with the stock trading at a discount to peers, this should lead to good upside from current levels."</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Baron Opportunity Fund on GDS Holdings Limited $GDS US</strong></h3><p><strong>Thesis:</strong><br />GDS Holdings Limited is a promising pan-Asia data center operator with significant growth potential, driven by strong demand for cloud services and AI applications, leading to a projected increase in share value from approximately $20 to $45–$55 within two to three years.</p><p><strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">Source</a></strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">: link here.</a></p><p><strong>Analysis:</strong><br />In the most recent quarter, we re-initiated a position in GDS Holdings Limited. GDS is a pan-Asia data center operator with 1.5 gigawatts of power capacity across approximately 100 data centers in and around “tier one” cities in mainland China (GDS Holdings or GDSH), as well as 1.0 gigawatts of power capacity in its rapidly growing Asia ex-China business (GDS International or GDSI). GDS develops and leases data center space (on a power reservation basis) to the top global technology companies such as Alibaba, Tencent, ByteDance, Microsoft, Google, and Oracle under long-term, contracted arrangements. We recently met with CEO/founder William Huang and CFO Daniel Newman in our offices and believe the best days for the company are ahead of it due to durable secular tailwinds in cloud adoption (early innings in Asia, which are lagging the U.S. and rest of the world), continued growth in data, increasing demand from AI applications, and global constraints on power availability yielding sustained pricing power in light of low available supply amid continued strong demand. On a sum-of-the-parts basis, we see a path for the business to be worth $45 to $55 per share in two to three years versus approximately $20 at recent market price. For GDSI, based largely on contracted customer commitments, we see cash flow growing from less than $50 million today to over $500 million over the next three years, with the opportunity to ramp towards $1 billion a few years after that. We value GDSI at $15 per share over the near term and $25 per share over the next four to five years. Regarding GDSH, we believe the mainland China data center business is at the doorstep of a growth inflection and see cash flow growing from about $700 million today to $1 billion over the next three years based on lease-up of its available power capacity. We value GDSH at $30 to $40 per share over the near term and remain encouraged that there will be several catalysts to further enhance value (including a structure to place certain stabilized data center assets into a listed REIT vehicle).</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Bell AM on GMO Payment Gateway $4689 JP</strong></h3><p><strong>Thesis:</strong><br />GMO Payment Gateway is a promising investment opportunity due to its strong growth history and favorable market conditions for cashless payments in Japan.</p><p><strong><a href="https://cdn.prod.website-files.com/61009b51dbefd53113bfe3dd/675f5e4025ddb6b5ac0b6edb_BGEF%20Wholesale%20Fund%20Monthly%20Report%20-%20November%202024.pdf">Source</a></strong><a href="https://cdn.prod.website-files.com/61009b51dbefd53113bfe3dd/675f5e4025ddb6b5ac0b6edb_BGEF%20Wholesale%20Fund%20Monthly%20Report%20-%20November%202024.pdf">, link here.</a></p><p><strong>Analysis:</strong><br />One position which was initiated through the course of the month was into Japanese payment processing company, GMO Payment Gateway. Over the past decade the company has grown revenue and earnings at a CAGR of approximately 25% and has medium-term targets to grow EBIT at a similar rate, aided by the ongoing shift to cashless payments in Japan. We have closely followed the company for several years, but its excessive valuation previously deterred us from making an investment. During November, the pullback in the stock price presented us with a great opportunity to invest in this quality small-cap growth name.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Baron Small Cap Fund on Ibotta, Inc. $IBOT US</strong></h3><p><strong>Thesis:</strong><br />Ibotta, Inc. is positioned for significant growth and profitability as a leader in consumer rewards, bolstered by strategic partnerships and an attractive valuation.</p><p><strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">Source</a></strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">: link here.</a></p><p><strong>Analysis:</strong><br />Ibotta, Inc. 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.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Bell AM on IDEXX Laboratories $IDXX US</strong></h3><p><strong>Thesis:</strong><br />IDEXX Laboratories is being re-invested in due to attractive valuations following prior significant underperformance in the market.</p><p><strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">Source</a></strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">: link here.</a></p><p><strong>Analysis:</strong><br />We also re-established a position in IDEXX Laboratories, a leading animal health diagnostics company. This marks our third investment in the stock since 2020. During the past two holding periods, the stock was a significant outperformer, and we exited each time due to excessive valuation. Since our last sale in July 2023, the stock underperformed the market by over 40%, primarily due to valuation contraction.</p><p>With the company’s long-term earnings growth trajectory intact, we believe the valuation has now sufficiently pulled back, making it an opportune time to re-enter this high-quality name.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Baron Global Advantage Fund on Illumina, Inc. $ILMN US</strong></h3><p><strong>Thesis:</strong><br />Illumina, Inc. is a dominant provider of next-generation sequencing instruments and consumables, poised for double-digit growth by reducing sequencing costs and offering an integrated workflow ecosystem in genetic analysis.</p><p><strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">Source</a></strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">: link here.</a></p><p><strong>Analysis:</strong><br />Lastly, we added to our investment in Illumina, Inc. The company supplies instruments and consumables for next generation sequencing (NGS), a technique that enables massive amounts of genetic analysis in both research and clinical diagnosis. It is the dominant player today with 80% of the market. We believe Illumina is on a path to return to double-digit growth in the intermediate to long term while benefiting from a long runway for growth with genomes sequenced for less than 1% of humans and 0.1% of species. We believe that Illumina would be able to grow its TAM by continuing to reduce the cost of sequencing as it has in the past (its recent Novaseq X) has reduced the cost from $600 to $200. We also believe that Illumina is more than a sequencing company. It’s an entire workflow and ecosystem, from sample prep to sequencing and bioinformatic analytics. While it used to be that the sequencing portion was a big chunk of the whole workflow’s costs, nowadays it’s in line with the other parts of the workflow. If researchers are used to Illumina protocols and their solution is spec’ed in on the workflows (particularly on the clinical side), it doesn’t make sense to save a bit more money on that few hundred dollars, if Illumina makes them more efficient on the other parts of the workflow like sample prep and bioinformatics.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Baron Focused Growth Fund on Interactive Brokers $IBKR US</strong></h3><p><strong>Thesis:</strong><br />Interactive Brokers is leveraging automation and global reach to dominate the low-cost brokerage market, promising double-digit revenue and earnings growth.</p><p><strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">Source</a></strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">: link here.</a></p><p><strong>Analysis:</strong><br />The company continues to gain market share due to its strong automation and ability to operate in international markets with little competition. This is allowing the company to continue to grow its new accounts, which have accelerated recently as they have now added over a million customers in just 12 months. The company has industry-leading margins of over 70% generating robust cash flow. It has significant cash on its balance sheet and is looking to deploy it towards acquisitions and continued platform growth. We continue to believe the company’s focus on the most sophisticated investors who trade a range of assets across different global markets is a key differentiating factor. The vast array of markets it serves and strong growth from countries outside the U.S. where low-cost brokerage is not well penetrated are key competitive advantages for the company. This allows the company to offer its clients the lowest cost trading due to its high level of automation, while also offering highly competitive rates on margin loans and paying its customers attractive yields on their uninvested cash balances. More than 80% of Interactive Brokers’ clients are non-U.S. citizens, and more than 80% of their investments are in U.S. stocks. The company has little direct competition serving this clientele. Interactive Brokers continues to hire software and computer engineers with a focus on automating many of the processes that competitors rely on employees to perform. With its low-priced offerings and leading range of capabilities, we believe Interactive Brokers is well positioned to continue its rapid pace of account growth from just over 3 million clients today. The company’s focus on automation should enable it to continue to be a low-priced provider while earning best-in-class margins, which we believe should lead to double-digit revenue and earnings growth.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Baron Emerging Markets Fund on ISC Co., Ltd. $095340 KS</strong></h3><p><strong>Thesis:</strong><br />ISC Co., Ltd. is poised to benefit from the shift to elastomer test sockets in semiconductor testing, leveraging its market dominance and strong growth linked to the AI and high-performance computing sectors.</p><p><strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">Source</a></strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">: link here.</a></p><p><strong>Analysis:</strong><br />Beginning this quarter, our semiconductor and AI-related investments (formerly part of the digitization theme), will be recategorized into a dedicated “advanced semiconductor/AI” theme given the growing importance and allocation of such businesses in the portfolio. Related to this newly minted theme, during the quarter we initiated a position in ISC Co., Ltd., a South Korean manufacturer of semiconductor testing equipment. The company is the dominant global supplier of elastomer test sockets, which are electrical interfaces used to test the performance of semiconductor devices. For decades, the industry has primarily tested semiconductors with pogo pin sockets, which use miniature spring-loaded pins to create electrical connections. However, as chips are becoming increasingly complex and are operating at ever faster speeds, pogo pin technology is reaching electromechanical limits. Elastomer test sockets, which consist of a flexible rubber sheet with embedded conductive particles, offer significant advantages over pogo pin sockets for testing advanced chips, including superior electrical performance, lower risk of damage to the device under test, faster time to market, and lower cost. We believe ISC will be the key long-term beneficiary of the inexorable shift from pogo pin to elastomer sockets. We also expect the company to maintain over 70% market share, due to its strong first mover advantages, superior technology, and unparalleled manufacturing scale. Moreover, ISC’s growth is levered to the booming leading edge processor market, which is driven by secular demand for AI and high-performance computing. We forecast that ISC will generate over 20% compound earnings growth over the next three to five years.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Baron Fifth Avenue Growth Fund on KKR & Co. Inc. $KKR US</strong></h3><p><strong>Thesis:</strong><br />KKR & Co. Inc. is a leading alternative asset manager poised for significant growth through its diversified investment strategies and expansion in less penetrated markets like Asia.</p><p><strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">Source</a></strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">: link here.</a></p><p><strong>Analysis:</strong><br />"During the quarter, we also initiated a new position in KKR & Co. Inc., one of the largest alternative asset managers in the world with $601 billion of assets under management (AUM). We believe alternative asset management is one of the best secular growth areas of financial services, and KKR should be a prime beneficiary. Founded in 1976 as one of the earliest leveraged buyout firms, KKR was led for decades by co-founders Henry Kravis and George Roberts. Since going public in 2010 as a pure-play private equity (PE) firm, KKR has successfully diversified into other private asset classes, including private credit, real estate, and infrastructure investing. AUM has risen nearly 10-fold since 2010 (an 18% CAGR), and PE’s share of firm AUM has shrunk to less than one-third. These non-PE asset classes are less penetrated than PE and provide a substantial runway for KKR to continue growing its funds, fees, and earnings. KKR also has significant growth opportunities in Asia, which it first entered in 2005 and where alternative asset management is far less penetrated compared to Western countries. In 2021, KKR successfully transitioned leadership from Kravis and Roberts to co-CEOs Scott Nuttall and Joe Bae, longtime KKR employees responsible for many of the growth initiatives that are driving KKR’s success today.</p><p>In addition to its globally diversified asset management business, KKR has significant exposure to the growth of private credit through its ownership of Global Atlantic, an insurance company with $183 billion of AUM. Global Atlantic is a beneficiary of the shift of illiquid credit assets into the private markets where they are better matched from a funding duration perspective and can deliver higher yields than publicly traded fixed income securities with the same credit ratings. KKR also has a strategic holdings segment that includes co-investments in a portfolio of high-quality businesses managed by KKR’s PE funds. These balance sheet investments should generate a durable stream of earnings and dividends for KKR that will be reinvested back into the business or returned to shareholders. We believe the company’s above-market growth is enabled by its brand, track record of strong returns, proven management team, deep client relationships, and diversified business which gives the company more growth avenues compared to peers. At the company’s Investor Day in April, management guided to 20% annualized growth in fee-related earnings and 30% annualized growth in earnings per share, reaching $7 to $8 by 2026. KKR management expects earnings to more than quadruple to over $15 per share within 10 years, representing a 16% CAGR. We think KKR’s diversified platform of leading businesses gives the company multiple ways to grow earnings as they execute into the expanding market for alternative assets, which should bode well for the stock over the long run."</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Arquitos CM on Liquidia $LQDA US</strong></h3><p><strong>Thesis:</strong><br />Liquidia is poised to capture at least 50% market share due to its more tolerable drug and patented manufacturing process, significantly increasing its profit potential.</p><p><strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">Source</a></strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">: link here.</a></p><p><strong>Analysis:</strong><br />"I believe that Liquidia can capture market share of at least 50%. This is not like a typical new competitor coming onto the market. There is a 50% to 60% drop out rate for United Therapeutics’ drug as patients are unable to tolerate it. Liquidia’s drug has been shown to be easier for patients to tolerate. Liquidia has a patented manufacturing process that allows the drug to provide higher dosage and better titration, meaning that patients receive the maximum benefit of the drug with the lowest chance of adverse effects. Liquidia has a better chance of serving these patients who cannot tolerate the current medication from its competitor, and patients may stay on the Liquidia drug longer than their current medication because it is more effective.</p><p>If Liquidia takes 50% market share, their annual profit potential in a static market is equal to their current enterprise value. Of course, the market is not static, it is growing significantly. Share would appreciate considerably even if they end up taking only a 10% or 20% market share. For context, Liquidia’s CEO thinks they can take 80% to 90% of the market. This is why United Therapeutics has been so aggressive. And, it is why it is worth the wait to hold Liquidia shares until at least the launch."</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Baron International Growth Fund on Lynas Corporation $LYC AU</strong></h3><p><strong>Thesis:</strong><br />Lynas is a leading Australian rare earths mining company positioned to benefit from rising demand for Neodymium ore in high-performance applications, while contributing to reducing global reliance on Chinese supply chains.</p><p><strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">Source</a></strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">: link here.</a></p><p><strong>Analysis:</strong><br />Lynas is an Australian rare earths mining company with production facilities in Australia, Malaysia, and the U.S. The company is a low-cost producer of rare earth minerals outside of China. Lynas’ primary product is Neodymium ore (NdPr), which is a critical mineral for manufacturing high-performance magnets used in electric vehicle (EV) motors, wind turbines, industrial automation/robotics, and consumer electronics. In addition, other heavy rare earths mined by the company are also used in various defense applications. Today, China controls approximately two-thirds of rare earths mining and around 90% of global processed output. Lynas is one of two significant rare earth producers outside of China and is arguably the only player that has successfully vertically integrated downstream operations of rare earths at scale. Processing of rare earths outside of China has been challenging for many producers for years, and it remains one of the key bottlenecks in global efforts to reduce reliance on China’s rare earth supply chain (we also consider Lynas a component of our global security theme). Lynas’ rare earth processing experience and advanced technology is a key competitive advantage, in our view. We are bullish on NdPr prices in the medium term due to growing demand from EVs and wind turbines. In addition, we expect Lynas to grow production output from expansion of NdPr processing in Australia as well as the launch of a new Department of Defense (DoD) sponsored separation facility in Texas.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Baron International Growth Fund on Meituan $3690 HK</strong></h3><p><strong>Thesis:</strong><br />Meituan is a leading Chinese food delivery platform with over 70% market share and a strong local services super app, expected to deliver over 20% compound earnings growth over the next three to four years.</p><p><strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">Source</a></strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">: link here.</a></p><p><strong>Analysis:</strong><br />During the quarter, as part of our digitization theme, we re-initiated a position Meituan, China’s largest food delivery platform with over 70% market share. Meituan also operates a leading super app for local services with over 700 million annual users. Built on millions of user-generated reviews, the company has become the go-to app for discovering local businesses such as restaurants and salons. In our view, Meituan is one of the most attractive food delivery businesses globally, given its massive scale (60 million daily delivery orders), strong competitive positioning, and solid operational track record. We expect its food delivery economics to continue improving over time, driven by rising ad revenue and lower user incentives. The company also operates a local services marketplace, monetizing primarily through commissions on in-store coupons, hotel bookings, and advertising. Contrary to consensus concerns regarding competition, our due diligence indicates competitive headwinds are likely to prove temporary as rivals increasingly focus on profitable growth, with Meituan retaining its industry dominance. We expect the company to deliver over 20% compound earnings growth over the next three to four years, with the potential for continued value creation thereafter.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Bell AM on NVIDIA $NVDA US</strong></h3><p><strong>Thesis:</strong><br />NVIDIA is a strong investment opportunity despite recent setbacks, supported by confident growth prospects in AI infrastructure and conservative consensus estimates on GPU demand.</p><p><strong><a href="https://cdn.prod.website-files.com/61009b51dbefd53113bfe3dd/670ca277bcb72874bd8fbc7f_BGEF%20Wholesale%20Fund%20Monthly%20Report%20-%20September%202024.pdf">Source</a></strong><a href="https://cdn.prod.website-files.com/61009b51dbefd53113bfe3dd/670ca277bcb72874bd8fbc7f_BGEF%20Wholesale%20Fund%20Monthly%20Report%20-%20September%202024.pdf">: link here.</a></p><p><strong>Analysis:</strong><br />We established a position in NVIDIA as the stock dipped early in September following a delay in delivering the latest Blackwell GPU due to a last-minute redesign, which we view as a temporary setback. While acknowledging that not owning NVIDIA over the past couple of years has been a costly decision from an alpha perspective, we have continued to analyse the company closely, including many research engagements with NVIDIA and other companies across the semiconductor supply chain, along with key customers. This research has increased our confidence in more sustainable capex growth in AI infrastructure, and we also believe that consensus estimates remain too conservative regarding near-term future GPU opportunities in AI inferencing, both in data centres and on edge devices (smartphones, PCs, and cars). The current position size is reflective of the overall risk/ reward profile as we weigh up the high quality of the company and its very attractive near-term fundamentals against the valuation and the uncertainty that comes with longer term forecasting. Consistent with our quality at a reasonable price approach, we will continue to re-test the thesis over time and seek opportunities to build the position size in line with our strict valuation discipline.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Baron Opportunity Fund on PAR Technology Corporation $PAR US</strong></h3><p><strong>Thesis:</strong><br />PAR Technology Corporation is poised for significant growth and profitability by providing a comprehensive software platform for the underinvested restaurant industry, with expectations of over 20% annual software revenue growth and first adjusted EBITDA profitability by Q3 2024.</p><p><strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">Source</a></strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">: link here.</a></p><p><strong>Analysis:</strong><br />During the quarter we purchased shares of PAR Technology Corporation, a leading software, hardware, and service provider to the foodservice industry. The restaurant industry has historically underinvested in technology, and PAR is building an all-in-one software platform for enterprise restaurants to run the most critical portions of their technology stacks. Within the past year, PAR completed the final steps of its multi-year organic and inorganic product journey championed by CEO Savneet Singh, selling off its non-core legacy government services business and acquiring online ordering, international, and convenience-store related products to complement its existing point-of-sale, loyalty, back office, and payments processing products. We believe PAR will grow its software revenues over 20% per year for the next several years, driven by wins with new restaurant brands and cross-sell of its product portfolio to existing customers, and faces benign competition in the industry, with legacy providers offering less-modern products and more modern competitors having limited success and track records with enterprise restaurant chains (over 50 locations). We project the company will report its first quarter of adjusted EBITDA profitability in the third quarter of 2024 and expect it to deliver strong operating leverage from revenue growth going forward. As PAR scales into vertical software-like margins in the coming years, driving a ramp in bottom line profitability and cash flow, we believe the stock should appreciate meaningfully.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Baron Global Advantage Fund on PDD Holdings Inc. $PDD US</strong></h3><p><strong>Thesis:</strong><br />PDD Holdings Inc. is a unique player in the global e-commerce market with a strong growth outlook, driven by its innovative Consumer-to-Manufacturer model and efficient operations, positioning it for substantial long-term value creation despite geopolitical concerns.</p><p><strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">Source</a></strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">: link here.</a></p><p><strong>Analysis:</strong><br />During the third quarter we re-initiated a small investment in **PDD Holdings Inc.** We believe the company is truly unique in the global e-commerce landscape, with an innovative business model, and very strong growth prospects. Founded in 2015 as Pinduoduo, the company has grown into China’s second-largest e-commerce player, capturing over 20% market share. PDD’s Consumer-to-Manufacturer (C2M) model, which connects manufacturers directly to consumers eliminated intermediaries, allowing for ultra-low prices that attract price-sensitive consumers and small merchants. Its discovery-based, algorithm-driven shopping experience has created a highly engaging platform, driving user and merchant growth in a virtuous cycle. We expect PDD to continue gaining share in China given its dominance in the value-for-money segment, growing branded product offerings at affordable prices, and high operational efficiency. PDD’s network effects and cost advantage, supported by its lean structure and efficient C2M model, are set to grow as it scales, both domestically and internationally. Its cross-border e-commerce platform, Temu, launched in September 2022, has rapidly become one of the world’s fastest-growing apps. Leveraging China’s excess capacity and PDD’s supply-chain efficiency, Temu wields strong pricing power over Chinese suppliers and attracts overseas consumers with competitively priced products. While still in early stage, Temu has achieved 2% of the global ex-China e-commerce market and a variable breakeven in the U.S. market, underscoring PDD’s focus on sustainable growth. Despite its rapid growth and profitability, PDD trades at a double-digit free cash flow yield (despite losses from the early-stage international expansion through Temu), significantly below sector peers. While concerns over geopolitical tensions exist, we believe PDD’s growing competitive edge, strong cash flow, and disciplined management position it to create substantial long-term value for shareholders.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Baron Fifth Avenue Growth Fund on Samsara Inc. $IOT US</strong></h3><p><strong>Thesis:</strong><br />Samsara Inc. is a rapidly growing cloud software provider in the telematics industry, helping companies enhance operational efficiency through data analysis and AI across commercial vehicles and industrial assets.</p><p><strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">Source</a></strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">: link here.</a></p><p><strong>Analysis:</strong><br />"Lastly, we initiated a position in Samsara Inc., which provides a cloud software platform for commercial vehicle telematics, video-based driver safety, driver workflow automation, and industrial equipment monitoring. Its software collects and analyzes data from sensors and cameras installed in its customers’ commercial trucks, construction equipment, warehouses, and other assets, helping companies visualize and improve the state of their operations. More than 17,500 customers in the transportation, field services, construction, utilities, and other industries have adopted Samsara, and last year the company became one of the fastest software companies ever to reach $1 billion in annual recurring revenue (ARR).</p><p>Samsara has been winning share from competitors in the $51 billion connected fleet software market due to its superior cloud native architecture, ability to address multiple use cases in a single platform, and its rapid product release cycle. Importantly, as Samsara continues to expand its connected asset base, it is building an unmatched data asset that it is using to drive better outcomes for its customers relative to competitors. Capturing more than 10 trillion data points from over 70 billion miles driven, Samsara uses AI to help companies optimize their vehicle routes, prevent accidents, improve asset utilization, reduce fuel expenses, and lower insurance premiums. In 2023, across its customer base, the company prevented 200,000 accidents and reduced carbon emissions by 2.3 billion pounds. Seeing a fast and tangible return on investment, customers have renewed and expanded their Samsara subscriptions at a healthy rate.</p><p>We see a long runway for growth as Samsara expands in existing accounts and wins new logos. Samsara is less than 50% penetrated in its existing customers’ vehicle fleets and has a significant opportunity to cross-sell newer non-vehicle products into its base. As it has scaled, Samsara has delivered healthy operating leverage, and we think free cash flow can expand to more than 20% longer term."</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Baron Emerging Markets Fund on Samsung Biologics Co., Ltd. $207940 KS</strong></h3><p><strong>Thesis:</strong><br />Samsung Biologics is positioned to benefit significantly from the growing demand for outsourced biopharmaceutical development and manufacturing services, driven by supply chain diversification and increased capacity investments.</p><p><strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">Source</a></strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">: link here.</a></p><p><strong>Analysis:</strong><br />As part of our global security/supply-chain diversification theme, we initiated a position in Samsung Biologics Co., Ltd., a leading contract development and manufacturing organization (CDMO) that offers outsourced services for the development and commercialization of biopharmaceutical drugs. Samsung Biologics is the third largest CDMO by revenue globally, with a client base that includes 16 of the world’s 20 largest pharmaceutical companies. We believe the large-scale CDMO industry will be under tight supply over the next three to five years, as global pharmaceutical companies increasingly outsource R&D and manufacturing services to top-tier players with proven quality and regulatory track records. In our view, Samsung Biologics will be a key beneficiary of such industry tailwinds as it has been actively investing in capacity expansion. With its new Plant 4 fully operational this year, Samsung Biologics currently stands as the world’s largest CDMO in terms of production capacity. We are encouraged by the ramp up in capacity utilization at Plant 4, which demonstrates sustained order momentum. We are also excited about the upcoming capacity expansion at Plant 5, which will begin production in 2025. More recently, the U.S. House passed the Biosecurity Act which will restrict business activity with targeted firms, such as Wuxi Biologics, a major Chinese CDMO, due to national security concerns. While we are still awaiting the Senate vote, we believe the long-term trend will be for global biopharmaceutical companies to diversify away from China, benefiting other top-tier CDMO players such as Samsung Biologics and Lonza Group AG, the leading European CDMO. In our view, Samsung Biologics could further gain a disproportionate share due to its competitive pricing relative to Lonza. Finally, as we have entered a central bank easing cycle, improved capital access and liquidity for the biopharmaceutical industry should also accelerate clinical trial activity and drug manufacturing.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Baron Fifth Avenue Growth Fund on Taiwan Semiconductor Manufacturing Company Limited (TSMC) $TSM US</strong></h3><p><strong>Thesis:</strong><br />Taiwan Semiconductor Manufacturing Company Limited (TSMC) is a leading semiconductor foundry with over 60% market share, poised for strong double-digit earnings growth driven by AI demand and technological advancements.</p><p><strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">Source</a></strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">: link here.</a></p><p><strong>Analysis:</strong><br />"We initiated a new position in Taiwan Semiconductor Manufacturing Company Limited (TSMC). Morris Chang founded TSMC in 1987 as the world’s first dedicated semiconductor foundry. Until then, semiconductor chips were always designed and manufactured by the same company. TSMC introduced a groundbreaking new business model, in which it acted purely as a contract manufacturer, which proved to be highly successful. TSMC maintained a focus on improving its manufacturing process technology and enabled the emergence of innovative fabless design companies, including NVIDIA, Apple, and Qualcomm, who became TSMC’s key customers. While many other foundry competitors emerged over the years, TSMC has outcompeted them with superior execution, operating efficiency, and customer service. Today, TSMC has a more than 60% share of the total semiconductor foundry market and over 90% share in leading edge semiconductor manufacturing. TSMC enjoys high barriers to entry given the ever-increasing cost and technological complexity of semiconductor manufacturing, while customer relationships are becoming increasingly sticky.</p><p>We expect TSMC to continue to benefit from the virtuous cycle of its scale advantage – higher profits leading to higher R&D and capex investments, allowing for further technological differentiation, resulting in more profits. We believe TSMC will sustain strong double-digit earnings growth for years to come, driven by continued market share gains, strong pricing power, and structural growth in AI demand. According to C.C. Wei, TSMC’s CEO[3], “almost all the AI innovators are working with TSMC to address the insatiable AI-related demand for energy-efficient computing.” Management forecasts that revenue from server AI chips, such as GPUs and other AI accelerators, will grow at a 50% CAGR from 2022 to 2028 and account for over 20% of TSMC’s revenue by 2028. We expect further long-term upside from the eventual proliferation of edge AI devices, including AI smartphones and AI PCs, which will require significantly more computing power and drive even stronger demand for TSMC’s leading-edge technology."</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Baron Opportunity Fund on Tesla $TSLA US</strong></h3><p><strong>Thesis:</strong><br />Tesla is leveraging its extensive data, advanced computational power, and significant investments in AI to lead in autonomous driving and humanoid robotics markets.</p><p><strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">Source</a></strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">: link here.</a></p><p><strong>Analysis:</strong><br />"AI relies on vast amounts of high-quality data and computational power, and we believe Tesla possesses distinct assets that will serve as a strong foundation for its AI initiatives. Since 2016, every Tesla vehicle produced has been outfitted with cameras and essential hardware, resulting in millions of connected cars globally that gather data from billions of miles driven each year by the Tesla fleet. This rich and unique dataset is invaluable for FSD training. Tesla is also differentiating with its AI training compute factory. Tesla finished 2023 with close to 15,000 NVIDIA H100 chip equivalents in training computation power. By the second quarter of 2024, it doubled this capacity. In the third quarter, the company activated its advanced training data center in Texas, which should allow the company to harness up to 90,000 H100 equivalent compute power by the end of 2024 — six times the compute capacity it had at the beginning of the year and by far the world’s largest autonomous driving training cluster. Unlike any other automotive company, Tesla is investing billions of profits generated by its automotive segment in its AI initiatives aiming to capture material share in lucrative markets of autonomy and robotics.</p><p>The rapid improvements in AI models and their ability to generalize machine learning efficiently, is also contributing to the developments of humanoids. Tesla is leveraging its multi-year, multi-billion-dollar investments in technologies such as inference and training compute, actuators, batteries, inverters, and scaled production capabilities — developed initially for its automotive business — to kickstart its Optimus humanoid-robot business. The company aims to deploy thousands of robots in its production facilities by the end of 2025, with plans to sell them to customers by 2026. We believe that the humanoid robot market opportunity could one day be even larger than the combined automotive and robotaxi opportunities."</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Baron Real Estate Fund on Vornado Realty Trust $VNO US</strong></h3><p><strong>Thesis:</strong><br />Vornado Realty Trust is poised for growth due to its well-located portfolio and improving office market fundamentals in New York City.</p><p><strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">Source</a></strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">: link here.</a></p><p><strong>Analysis:</strong><br />During the third quarter, we initiated a position in Vornado Realty Trust, a REIT that owns a portfolio of premier office and street retail properties concentrated in New York City. The company also owns a small portfolio of apartment units in NYC and two iconic commercial properties in Chicago (the Mart) and San Francisco (555 California Street).</p><p>While we have remained generally cautious on office real estate for several years in light of both cyclical and secular headwinds, we also have acknowledged that certain well-located, modern office properties were poised to gain market share and outperform as market conditions improved. Vornado’s portfolio falls into this category.</p><p>We are optimistic about our investment in Vornado for several reasons:</p><ol><li><p>Signs indicate that office fundamentals are bottoming and beginning to improve, especially in New York City. These include stable or rising office space utilization, strong leasing activity, stabilizing rents, and more confident corporate decision-making. CEO Steve Roth noted during the Q2 earnings call:</p></li></ol><blockquote><p>"After a difficult four or so years, market dynamics are now reversing and growing constructive. There is no new supply on the horizon, tenants are growing and expanding and searching for space. And New York continues to be the single best market in the nation."</p></blockquote><ol><li><p>The recently completed PENN 2 redevelopment project ($850 million) is experiencing increased tenant interest and leasing activity, which should boost cash flow and enhance the Penn District’s appeal.</p></li><li><p>Street retail properties, accounting for 17% of total cash flow, have seen renewed buyer interest. Management believes these properties have recovered to or exceeded 2019 valuations.</p></li><li><p>Vornado is well-positioned to capitalize on distressed real estate opportunities due to its strong balance sheet and liquidity position.</p></li><li><p>Despite significant stock appreciation since our initial purchase, Vornado’s valuation remains untethered from the private market value of its real estate portfolio and trades at a discount relative to peers.</p></li></ol><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Baron Asset Fund on Welltower Inc. $WELL US</strong></h3><p><strong>Thesis:</strong><br />Welltower Inc. is well-positioned to capitalize on robust growth opportunities in the senior housing industry, with potential for earnings to more than double over the next five years due to favorable demographics and strategic management initiatives.</p><p><strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">Source</a></strong><a href="https://www.baroncapitalgroup.com/sites/default/files/2024-10/baron-funds-quarterly-report-9.30.24.pdf">: link here.</a></p><p><strong>Analysis:</strong><br />We initiated a new position in Welltower Inc., a leading operator of senior housing and medical office buildings in the U.S. and internationally. The senior housing industry exhibits robust fundamentals, and Welltower is poised to capture cyclical and secular growth.</p><p>Key factors supporting this investment include:</p><ol><li><p>If occupancy returns to pre-pandemic levels, senior housing cash flow could grow by over 50%. Additional structural upside exists through asset management improvements, proprietary data analytics, and amenity-based pricing initiatives.</p></li><li><p>Favorable demographics: The population aged over 80 is projected to grow at a 4%-5% CAGR over the next five years.</p></li><li><p>Limited supply: New construction is constrained due to unattractive developer economics and long entitling processes (about five years).</p></li><li><p>Attractive acquisition opportunities: The current capital-constrained financing environment should enable Welltower to acquire assets at prices below replacement cost.</p></li><li><p>Strong leadership: CEO Shankh Mitra and his team are focused on driving value per share through accretive capital allocation.</p></li></ol><p>Given these factors, we see a path for earnings to double over the next five years, supporting attractive returns for the fund.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Alluvial on Zegona Communications $ZEG LN</strong></h3><p><strong>Thesis:</strong><br />Zegona Communications is a turnaround investment poised to transform Vodafone Spain into a profitable telecom powerhouse within the next 2-3 years.</p><p><strong><a href="https://alluvialcapital.com/wp-content/uploads/2024/10/Alluvial-Capital-Management-Q3-2024-Letter-to-Partners.pdf">Source</a></strong><a href="https://alluvialcapital.com/wp-content/uploads/2024/10/Alluvial-Capital-Management-Q3-2024-Letter-to-Partners.pdf">: link here.</a></p><p><strong>Analysis:</strong><br />Our most significant new holding is Zegona Communications. This is a special situation in which seasoned telecom executives are addressing inefficiencies in a European telecom operator.</p><p><strong>Background:</strong><br />Zegona was founded in 2015 by former Virgin Media executives to buy struggling telecom companies, improve operations, and sell them. After successful investments in Telecable and Euskaltel, Zegona identified Vodafone Spain as its next opportunity.</p><p><strong>Vodafone Spain Acquisition:</strong><br />Zegona acquired Vodafone Spain for €5.0 billion in 2024, funding the deal with a mix of equity, seller financing, and bridge loans, contributing just 6% in cash.</p><p><strong>Turnaround Plan:</strong></p><ol><li><p><strong>Financing:</strong> Replaced bridge financing with a 5-year loan.</p></li><li><p><strong>Cost Structure:</strong> Announced plans to reduce headcount by one-third and implement efficiency initiatives.</p></li><li><p><strong>Infrastructure Monetization:</strong> Partnered with MasMovil and Telefonica to form fibercos, unlocking billions in value from network assets.</p></li></ol><p><strong>Outlook:</strong><br />Currently, Zegona is the moderately-levered owner of a stagnant telecom player. In 2-3 years, it could be a lightly-levered owner of a growing Spanish telecom leader. Challenges remain, but the value creation potential is extraordinary.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h4>Here are some additional Q3 letters :</h4><p><br /><br /></p><p><em>Everything you read here is for information purposes only and is not an investment recommendation.</em></p><div class="subscription-widget-wrap-editor"><div class="subscription-widget show-subscribe"><div class="preamble"><p class="cta-caption">Thanks for reading Stock Analysis Compilation! Subscribe for free to receive new posts and support my work.</p></div><form class="subscription-widget-subscribe"><input class="email-input" name="email" tabindex="-1" type="email" /><input class="button primary" type="submit" value="Subscribe" /><div class="fake-input-wrapper"><div class="fake-input"></div><div class="fake-button"></div></div></form></div></div>