Investor Summary
Fund Strategy
FUND PERFORMANCE AS OF 31st December 2025
| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 11.62% | -2.8% | -14.4% |
| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 11.62% | -2.8% | -14.4% |
Baron Growth Fund declined 2.69% in Q4 2025, underperforming the Russell 2000 Growth Index which gained 1.22%. The fund endured a challenging year, declining 14.18% versus a 13.01% gain in the benchmark. Approximately 60% of relative underperformance was attributed to positions where the market's assessment of AI risk differed from management's view. A cohort of AI-impacted stocks representing 42% of the portfolio, including Gartner, CoStar, Clearwater Analytics, FactSet, MSCI, and Guidewire, declined 15% despite producing 10% revenue growth and 15% EPS growth. The fund's strategy of owning high-quality businesses remained out of favor as investors sold higher-quality investments to buy riskier stocks. However, the manager observed improvement in December, with the fund outperforming by 635 basis points over three weeks as the market began re-evaluating AI-impacted names. The portfolio grew earnings by 12% while experiencing 26% valuation contraction, creating significant potential for future outperformance when quality investing returns to favor.
Baron Growth Fund invests in a concentrated portfolio of high-quality, competitively advantaged small and medium-sized businesses with sustainable growth prospects, believing that superior business characteristics will drive long-term outperformance despite near-term style headwinds.
The manager believes the portfolio is well positioned to generate compelling returns going forward, expecting that stock performance will track underlying business growth over time. They are optimistic that as the market's appreciation for high-quality businesses returns and its perspective on AI impact aligns with their own, the fund's valuation will expand, enhancing returns from consistent compounded earnings growth.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Mar 1 2026 | 2025 Q4 | ACGL, CHH, CNS, CSGP, FDS, FIGS, GLPI, GWRE, HLI, IDXX, IT, KNSL, MC, MORN, MSCI, MTD, MTN, NEOG, PRI, RRR, TECH | AI, financials, growth, Quality, small caps, underperformance, valuation | - | Baron Growth Fund's quality-focused small-cap strategy faced headwinds in 2025, declining 14.18% as AI concerns weighed on 42% of the portfolio despite strong fundamentals. The fund's concentrated approach to high-quality businesses with competitive advantages remains positioned for recovery as valuation compression of 26% versus 12% earnings growth suggests significant upside potential when market sentiment shifts. |
| Nov 18 2025 | 2025 Q3 | ARCH, CG, CHH, CNS, CSGP, CWAN, FDS, FIGS, GLPI, GWRE, HLI, IDXX, IRDM, IT, KNSL, MC, MORN, MSCI, MTD, MTN, NEOG, PRI, RRR, TECH | AI, Buybacks, financials, growth, Quality, small cap, technology, underperformance | - | Baron Growth Fund's high-quality small-cap strategy faced its worst period since 1975 as investors rotated to riskier stocks, resulting in 8.69% quarterly decline versus 12.19% benchmark gain. Despite underperformance, portfolio fundamentals strengthened with superior margins and cash flows. Manager expects aggressive share buybacks and remains confident in long-term strategy given historical precedent of subsequent outperformance. |
| Aug 18 2025 | 2025 Q2 | ACGL, ANSYS, BFAM, CG, CHH, CNS, CSGP, CWAN, DNUT, FDS, FIGS, GLPI, GWRE, HLI, IDXX, IRDM, IT, KNSL, MC, MORN, MSCI, MTD, MTN, NEOG, PRI, RRR, TECH | Casinos, growth, insurance, Long Term, Quality, small cap, Veterinary | - | Baron Growth Fund's high-conviction small-cap strategy underperformed in Q2 as investors chased riskier stocks, but the portfolio now exhibits superior financial metrics with 28.5% operating margins. Strong performance from IDEXX and Guidewire demonstrates the power of long-term holdings in competitively advantaged businesses. Managers plan to add new positions, viewing recent small-cap underperformance as creating abundant opportunities. |
| Mar 31 2025 | 2025 Q1 | ACGL, ALTR, ANSYS, ARE, BFAM, CG, CHH, CNS, CSGP, CWAN, DEI, DNUT, FDS, FIGS, GLPI, GWRE, HLI, IDXX, IRDM, IT, KNSL, MC, MORN, MSCI, MTD, MTN, NEOG, PRI, RRR, TECH, TREX | growth, insurance, Quality, real estate, small caps, software | - | Baron Growth Fund outperformed in Q1 2025 despite a 4.25% decline, beating the Russell 2000 Growth by 690 basis points. Strong stock selection in quality businesses drove results, led by specialty insurers and software companies. The portfolio has improved profitability metrics while maintaining growth prospects. Management expects continued outperformance through their long-term, quality-focused investment approach. |
| Dec 31 2024 | 2024 Q4 | ACGL, ALTR, ANSYS, ARE, BFAM, CG, CHH, CNS, CSGP, CWAN, DEI, DNUT, FDS, FIGS, GLPI, GWRE, HLI, IDXX, IRDM, IT, KNSL, MC, MORN, MSCI, MTD, MTN, NEOG, PRI, RRR, TECH, TREX | Compounding, growth, Long Term, Quality, small cap, underperformance |
IDXX CSGP MTN |
Baron Growth Fund's 2024 underperformance reflects its disciplined focus on quality growth businesses during a year favoring speculative, lower-quality investments. Temporary headwinds at key holdings like IDEXX and CoStar, plus benchmark distortion from AI-driven stocks, weighed on results. The fund maintains its long-term approach, expecting quality fundamentals to drive superior compounding returns as market preferences normalize. |
| Sep 30 2024 | 2024 Q3 | ACGL, ALTR, ANSYS, ARE, BFAM, CG, CHH, CLRO, CNS, CSGP, DEI, DNUT, ESNT, FDS, FIGS, GLPI, GWRE, HLI, IDXX, IRDM, IT, KNSL, MC, MORN, MSCI, MTD, MTN, NEOG, PRI, RRR, SMCI, TECH, TREX, WST | financials, growth, long-term, Outperformance, Quality, small caps, technology | - | Baron Growth Fund gained 11.15% in Q3, outperforming its benchmark as quality small-cap holdings rebounded from earlier declines. The fund maintains a concentrated portfolio of 33 high-quality businesses with sustainable competitive advantages, held for an average of 17.2 years. Strong fundamental growth across holdings positions the fund for continued long-term outperformance despite short-term market volatility. |
| Jul 27 2024 | 2024 Q2 | ACGL, ALTR, ANSYS, ARE, BFAM, BYD, CG, CHH, CNS, CSGP, CWAN, DEI, DNUT, ESNT, FDS, FIGS, GLPI, GWRE, HLI, IDXX, IRDM, IT, KNSL, MC, MORN, MSCI, MT, MTN, NEOG, PRI, RRR, TECH, TREX, WST | growth, insurance, Long Term, real estate, small cap, software | - | Baron Growth Fund fell 8.23% in Q2 2024, underperforming due to declines in four major positions including Kinsale Capital and CoStar Group. The managers view these as short-term setbacks rather than structural issues. The fund's long-term approach continues with a 16.9-year average holding period and confidence in delivering superior returns through compounding growth in competitively advantaged small-cap businesses. |
| Apr 15 2024 | 2024 Q1 | ACGL, ALTR, ANSYS, ARE, BFAM, BYD, CG, CHH, CNS, CSGP, CWAN, DEI, DNUT, ESNT, FDS, FIGS, GLPI, GWRE, HLI, IDXX, IRDM, IT, KNSL, LFUS, MC, MORN, MSCI, MSTR, MTD, MTN, NEOG, PENN, PRI, RRR, SMCI, TECH, TREX, VAC, WST | financials, growth, insurance, Long Term, real estate, small caps | - | Baron Growth Fund's disciplined long-term approach delivered 5.52% returns in Q1 2024, with strong performance from specialty insurers and real estate holdings offsetting benchmark underperformance from avoiding speculative AI and crypto plays. The fund maintains conviction in its process of investing in competitively advantaged businesses with sustainable growth prospects. |
| Feb 20 2024 | 2023 Q4 | ACGL, CHH, IRDM, KNSL, MTN, NEOG | - | - | |
| Sep 30 2023 | 2023 Q3 | ARCH, CSGP, DNUT, FDS, IRDM, MSCI, MTN | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIAI has been integrated into RGA's research process through tools like NotebookLM, Gems in Gemini, and Claude Code. The firm views AI as a force multiplier for human judgment rather than a replacement, emphasizing the Kasparov Law principle. They believe the market narrative around AI displacement is swinging to unhelpful extremes, creating investment opportunities. |
Machine Learning Automation Software Productivity Innovation |
QualityThe company emphasizes investing in businesses with excellent economics, durable competitive advantages, and high-integrity management. This quality focus is evident in concentrated equity holdings and operating business acquisitions. |
Durable Advantages Management Quality Economic Moats Competitive Position | |
Small CapsSmall caps getting strong start in 2026 supported by easing monetary conditions and constructive fiscal backdrop. Small caps more sensitive to economic cyclicality which is overdue for expansion. Expected to grow at better pace than large caps in 2026 after long period of underperformance. |
Value Growth Cyclical Monetary Policy Fiscal Policy | |
| 2025 Q3 |
AIAI has been integrated into RGA's research process through tools like NotebookLM, Gems in Gemini, and Claude Code. The firm views AI as a force multiplier for human judgment rather than a replacement, emphasizing the Kasparov Law principle. They believe the market narrative around AI displacement is swinging to unhelpful extremes, creating investment opportunities. |
Machine Learning Automation Software Productivity Innovation |
BuybacksShare repurchases in 2024 and 2025 hit consecutive records as companies raced to meet Tokyo Stock Exchange capital efficiency mandates. Buybacks were a primary driver of the market's 20% climb in the first half of FY2025. |
Share Repurchases Capital Efficiency TSE Mandates Shareholder Returns Records | |
QualityThe company emphasizes investing in businesses with excellent economics, durable competitive advantages, and high-integrity management. This quality focus is evident in concentrated equity holdings and operating business acquisitions. |
Durable Advantages Management Quality Economic Moats Competitive Position | |
Small CapsSmall caps getting strong start in 2026 supported by easing monetary conditions and constructive fiscal backdrop. Small caps more sensitive to economic cyclicality which is overdue for expansion. Expected to grow at better pace than large caps in 2026 after long period of underperformance. |
Value Growth Cyclical Monetary Policy Fiscal Policy | |
| 2025 Q2 |
Casinos |
|
InsuranceBerkshire's insurance operations generated pre-tax underwriting gains and grew float to $176 billion. The combined ratio of 87.1% across property and casualty businesses was exceptional. However, increased competition and rising claim cost trends may pressure future earnings. |
P&C Insurance Reinsurance Float Underwriting GEICO | |
QualityThe company emphasizes investing in businesses with excellent economics, durable competitive advantages, and high-integrity management. This quality focus is evident in concentrated equity holdings and operating business acquisitions. |
Durable Advantages Management Quality Economic Moats Competitive Position | |
Small CapsSmall caps getting strong start in 2026 supported by easing monetary conditions and constructive fiscal backdrop. Small caps more sensitive to economic cyclicality which is overdue for expansion. Expected to grow at better pace than large caps in 2026 after long period of underperformance. |
Value Growth Cyclical Monetary Policy Fiscal Policy | |
Veterinary |
||
| 2025 Q1 |
InsuranceBerkshire's insurance operations generated pre-tax underwriting gains and grew float to $176 billion. The combined ratio of 87.1% across property and casualty businesses was exceptional. However, increased competition and rising claim cost trends may pressure future earnings. |
P&C Insurance Reinsurance Float Underwriting GEICO |
QualityThe company emphasizes investing in businesses with excellent economics, durable competitive advantages, and high-integrity management. This quality focus is evident in concentrated equity holdings and operating business acquisitions. |
Durable Advantages Management Quality Economic Moats Competitive Position | |
Real Estate |
||
Software |
||
| 2024 Q4 |
AIAI has been integrated into RGA's research process through tools like NotebookLM, Gems in Gemini, and Claude Code. The firm views AI as a force multiplier for human judgment rather than a replacement, emphasizing the Kasparov Law principle. They believe the market narrative around AI displacement is swinging to unhelpful extremes, creating investment opportunities. |
Machine Learning Automation Software Productivity Innovation |
QualityThe company emphasizes investing in businesses with excellent economics, durable competitive advantages, and high-integrity management. This quality focus is evident in concentrated equity holdings and operating business acquisitions. |
Durable Advantages Management Quality Economic Moats Competitive Position | |
Real Estate |
||
| 2024 Q3 |
GrowthEconomic growth is accelerating according to Hedgeye's real GDP projection model, gaining significant momentum in Q1 and continuing through much of Q2 2026. This growth acceleration historically supports risk assets, particularly cyclical equities and commodities. |
Economic Growth GDP Risk Assets Cyclical Acceleration |
QualityThe company emphasizes investing in businesses with excellent economics, durable competitive advantages, and high-integrity management. This quality focus is evident in concentrated equity holdings and operating business acquisitions. |
Durable Advantages Management Quality Economic Moats Competitive Position | |
Small CapsSmall caps getting strong start in 2026 supported by easing monetary conditions and constructive fiscal backdrop. Small caps more sensitive to economic cyclicality which is overdue for expansion. Expected to grow at better pace than large caps in 2026 after long period of underperformance. |
Value Growth Cyclical Monetary Policy Fiscal Policy | |
| 2024 Q2 |
InsuranceBerkshire's insurance operations generated pre-tax underwriting gains and grew float to $176 billion. The combined ratio of 87.1% across property and casualty businesses was exceptional. However, increased competition and rising claim cost trends may pressure future earnings. |
P&C Insurance Reinsurance Float Underwriting GEICO |
Real Estate |
||
Software |
||
| 2024 Q1 |
Financial Services |
|
InsuranceBerkshire's insurance operations generated pre-tax underwriting gains and grew float to $176 billion. The combined ratio of 87.1% across property and casualty businesses was exceptional. However, increased competition and rising claim cost trends may pressure future earnings. |
P&C Insurance Reinsurance Float Underwriting GEICO | |
Real Estate |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Dec 31, 2024 | Fund Letters | Baron Growth Fund | IDXX | IDEXX Laboratories, Inc. | Health Care | Health Care Equipment | Bull | NASDAQ | diagnostics, growth, Health Care Equipment, Medical devices, Pet Care, Product cycle, Veterinary diagnostics | Login |
| Dec 31, 2024 | Fund Letters | Baron Growth Fund | CSGP | CoStar Group, Inc. | Real Estate | Real Estate Services | Bull | NASDAQ | analytics, Growth Investment, information services, marketplace, Real Estate Services, Residential Real Estate, TAM expansion | Login |
| Dec 31, 2024 | Fund Letters | Baron Growth Fund | MTN | Vail Resorts, Inc. | Consumer Discretionary | Hotels, Restaurants & Leisure | Bull | NYSE | European expansion, Leisure, Real Estate, recurring revenue, Season Passes, Ski Resorts, Tourism | Login |
| TICKER | COMMENTARY |
|---|---|
| ACGL | Shares of specialty insurer Arch Capital Group Ltd. rose on strong earnings results and active capital management. Third-quarter earnings per share beat Street expectations due to improved underwriting margins and very low catastrophe losses, as there were no landfall hurricanes in the U.S. this season for the first time since 2015. |
| CHH | CHH is an asset-light, high-margin (60%+ EBITDA margin on revenue ex-pass-through costs) hotel franchisor trading at a distressed multiple due to cyclical top-line headwinds and KPI deterioration experienced in 2025, namely U.S. RevPAR declines and lack of U.S. room growth. The market has severely punished the stock—down from $154 in early 2025 to $106 today—now pricing in structural decline fears. However, the business is still growing earnings, is highly cash-generative, and may have the ability to unlock a significant amount of cash on the balance sheet to buy back shares at these historically low levels. CHH is currently trading around the bottom 2.5% of its historical valuation range over the past ten years at 10.7x EBITDA. If the stock reverts to its 20-year median valuation of 14x forward EBITDA (which would still be a 3-6x EBITDA discount to Hyatt, Hilton, and Marriott), the stock has ~50% upside. |
| CSGP | The shares of CoStar Group, Inc., the global leader in digitizing real estate, declined in the fourth quarter, due to concerns that the company's residential Homes.com platform will continue to require significant capital investment and competitive worries that Google's new real estate advertisement format and Zillow's OpenAI partnership could divert traffic from Homes.com in the years ahead. |
| FDS | By looking at their Rnancials, FactSet, PayPal, Adobe, and Salesforce seem to be doing Rne. The market, however, is reading subdued revenue growth as a sign of increased competition on their core oSerings. These companies' outlooks look more di'cult than their past. |
| FIGS | FIGS, Inc. designs and sells scrubwear for health care professionals through a digitally native, direct-to-consumer strategy. Shares rose after the company reported quarterly results that beat expectations and raised its outlook for revenue and profits for the remainder of the year. FIGS' revenue grew 8% due to robust customer demand for its health care apparel, supported by improving execution and normalizing industry trends. |
| GWRE | Shares of P&C insurance software vendor Guidewire Software, Inc. declined during the quarter following strong gains earlier in the year, as the broader software sector came under pressure. After a multi-year transition period, we think Guidewire's cloud migration is largely complete. We believe cloud will be the sole path forward, with annual recurring revenue benefiting from new customer wins and migrations of existing customers to InsuranceSuite Cloud. |
| HLI | global investment bank Houlihan Lokey, Inc. presented a drag in Financials. |
| IDXX | Veterinary diagnostics leader IDEXX Laboratories, Inc. contributed to performance after again reporting better-than-expected financial results. Foot traffic to veterinary clinics in the U.S. remains modestly negative but is poised to recover over the next several years. Even so, IDEXX's excellent execution has enabled the company to continue delivering robust performance. |
| IT | Gartner is a global leader in research services, with a long history of delivering valuable insights and data to business and technology leaders. In our view, the company has the best brand in IT research, supported by its scale and a compelling customer value proposition. These advantages have driven a long history of strong organic growth and robust free-cash-flow conversion. The stock price has declined meaningfully from recent highs due to investor concerns surrounding AI-related disruption. We believe these concerns are overstated. In our view, Gartner is well-positioned to reaccelerate organic growth due to continued high customer engagement and the large opportunity to sell to new and existing customers. We took advantage of the opportunity to buy shares in this well-managed company at a bargain price. |
| KNSL | Shares of specialty insurer Kinsale Capital Group, Inc. fell during the quarter due to concerns about moderating growth amid a cyclical slowdown for the property and casualty insurance industry. While third-quarter revenue growth improved sequentially, the pace of improvement was more modest than suggested by monthly data from state insurance commissioners. |
| MSCI | MSCI Inc. 4.3 1.40 (0.02) |
| MTD | Mettler-Toledo's stock rebounded in the fourth quarter reflecting the company's ability to successfully navigate substantial tariff and research budget pressures while maintaining strong growth and margin expansion in key segments. We believe Mettler should be well positioned to capitalize on global trends in automation, digitalization, and nearshoring which should drive mid-single digit revenue and low teens EPS growth through 2030. |
| MTN | Vail Resorts operates mountain resorts and ski lodging, with the majority of revenue derived from US properties. It probably goes without saying that one can't ski without snow. Unfavorable weather conditions throughout 2025 dragged on visitations and skier spending. In addition, rising labor and operational costs have further pressured margins, and management has failed to reassure investors. We believe that Vail's challenges are more cyclical than structural, and if/when snowfall averages revert, an undemanding valuation could help underpin an increase in the stock price. |
| NEOG | and out-of-favor recovery stocks (RXST, NEOG, MRVI). |
| RRR | Red Rock Resorts, Inc., a casino owner and operator focused on the Las Vegas Locals market, spent over $800 million developing a new elite property, Durango, for this market. It successfully completed Durango and is now generating robust returns alongside strengthening performance across six core Las Vegas Locals casinos. The company continues to report strong visitation and robust slot and table game play, along with improving activity from uncarded and non-rewards customers. The company's initiative of opening its Durango property is generating robust returns, and performance across the company's six core casinos has strengthened as the Las Vegas Locals market absorbs Durango's extra supply. Given the strength of the market, management continues to ramp up capital investment, which we believe should support ongoing revenue and EBITDA growth over the next several years. The stock appreciated 39.4% in 2025. |
| TECH | Bio-Techne is a leader in the life sciences research market with a broad portfolio of products that are used to enable discoveries of new drugs, therapeutics, and diagnostics. These products include over 6,000 proteins, 400,000 antibody types, and 2,400 diagnostic assays. Around 80% of the business is recurring revenues. We are encouraged by the new CEO's strategy to leverage the core business and expand the company's leadership position in protein research. Consternation surrounding the health of customer research spending gave us the opportunity to buy the stock at a discount to our estimate of intrinsic value. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
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| No Recent Sells Data | ||||||
| Industry | Prev Quarter % | Current Quarter % | Change |
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| No industry data available | |||