The curated database of hedge funds that publish investor letters. Research by geography, strategy, and schools of thought.
| # | Fund | Strategy | Style | Geography | AUM | Latest Letter |
|---|---|---|---|---|---|---|
As of Aug 14, 2026
Baron Asset Fund rose 18.98% in Q2 2026, outperforming the Russell Midcap Growth Index by 443 basis points despite significant headwinds from Beta and Momentum factors that posted exceptional performance. The Fund's outperformance was driven primarily by its large SpaceX position, which completed the largest IPO in history raising over $85 billion and appreciated more than 3,000% since initial investment. Market returns were driven by a narrow group of AI beneficiary stocks, with semiconductors nearly doubling during the quarter. The manager believes many of the Fund's software and services holdings have been unfairly penalized by AI disruption fears, now trading at a 47% discount to 10-year average multiples despite 27% fundamental growth and only 3% multiple compression in other holdings. These businesses lost 37.6% over the past year due to 46% multiple compression, not fundamental deterioration. The manager expects valuations to re-rate higher as market leadership broadens, supported by evidence of reversal since late June with software and services holdings rallying 12% while semiconductors corrected 30%. The Fund maintains concentrated positions in businesses benefiting from secular trends in infrastructure spending, medical devices, and AI infrastructure, with the top 10 holdings representing 65% of assets and six held for over a decade.
The Fund invests in mid-cap growth companies with significant competitive advantages, best-in-class management teams, and secular growth tailwinds, holding concentrated positions for extended periods. The manager believes the current market environment has created exceptional opportunities in software and services businesses that have been unfairly penalized by AI disruption fears, now trading at historically low valuations despite resilient fundamentals and 27% fundamental growth. The Fund's large SpaceX position provides exposure to massive addressable markets in connectivity, launch, infrastructure, and AI, while other holdings benefit from secular trends in infrastructure spending, medical device innovation, and AI infrastructure buildout.
The manager remains optimistic that the Fund is positioned to continue outperforming, particularly as the Fund's overexposure to software and services businesses becomes a positive tailwind. Despite material improvement in these businesses' prospects, they are trading at exceptionally attractive valuations and the manager expects valuations to re-rate higher as market leadership broadens beyond existing AI beneficiaries. The manager is encouraged by evidence since late June of a sustained reversal of the AI winners trade, with software and services holdings up 12% on a weighted average basis while the Index declined 6.1% and semiconductors corrected nearly 30%. The manager believes many high-quality, competitively advantaged businesses have been unfairly penalized by indiscriminate AI disruption fears, and that strong financial results will continue to demonstrate resilience. The manager expects these companies will utilize AI to improve products, lower costs, and enhance rather than undermine their competitive positions.
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