Installed Building Products (IBP) Slipped Due to Investor Concerns
Baron Funds, an investment management company, released its “Baron Small Cap Fund” second-quarter 2024 investor letter. A copy can be downloaded here. The fund returned -6.43% (Institutional Shares) in the quarter trailing the Russell 2000 Growth Index’s -2.92 % return and the broader Russell 3000 Index’s 3.22% return. The technology-heavy NASDAQ Composite Index and the broader indices hit record highs in the second quarter. Still, the rally was extremely focused and narrow, with the mega-cap Magnificent Seven's consistently excellent performance accounting for all of the larger-cap index gains while small-cap stocks declined. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Baron Small Cap Fund highlighted stocks like Installed Building Products, Inc. (NYSE:IBP), in the second quarter 2024 investor letter. Installed Building Products, Inc. (NYSE:IBP) engages in the installation of insulation, waterproofing, fire-stopping, fireproofing, garage doors, rain gutters, window blinds, shower doors, closet shelving and mirrors, and other products. The one-month return of Installed Building Products, Inc. (NYSE:IBP) was 9.32%, and its shares gained 42.88% of their value over the last 52 weeks. On August 5, 2024, Installed Building Products, Inc. (NYSE:IBP) stock closed at $223.01 per share with a market capitalization of $6.297 billion.
Baron Small Cap Fund stated the following regarding Installed Building Products, Inc. (NYSE:IBP) in its Q2 2024 investor letter:
"Installed Building Products, Inc. (NYSE:IBP) is a leading installer of insulation and complementary building products for U.S. residential homes. Shares fell on investor concerns that U.S. housing construction activity levels would slow due to the diminished ability of consumers to afford down payments and monthly mortgage payments, both of which are significantly higher than they were several years ago. We remain confident in our long-term investment thesis, as the U.S. housing market continues to grow, and IBP continues to execute on its multi-prong organic growth strategy, supplemented by highly accretive acquisitions. IBP has been able to unexpectedly grow its EBITDA very significantly over the last few years when single-family housing has been weak, so its outlook is bright as we expect to transition to a better macro environment. The stock has almost tripled off the bottom in 2022, and we have taken some profits along the way to manage the position size."
A construction worker installing a garage door in a new residential home.
Installed Building Products, Inc. (NYSE:IBP) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 22 hedge fund portfolios held Installed Building Products, Inc. (NYSE:IBP) at the end of the first quarter which was 25 in the previous quarter. In the second quarter, the consolidated net revenue of Installed Building Products, Inc. (NYSE:IBP) increased 8% to $740 million compared to $687 million in Q2 2023, driven by growth in residential and commercial end markets within the installation segment. While we acknowledge the potential of Installed Building Products, Inc. (NYSE:IBP) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed Installed Building Products, Inc. (NYSE:IBP) and shared the list of small-cap stocks Jim Cramer is talking about. Installed Building Products, Inc. (NYSE:IBP) is in the 8th position on the list. Polen U.S. Small Company Growth Strategy established a position in Installed Building Products, Inc. (NYSE:IBP) during the second quarter of 2024. In addition, please check out our hedge fund investor letters Q2 2024 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.