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 |
|---|---|---|---|---|---|---|
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.
As of Aug 14, 2026
Ronald Baron founded Baron Capital with 52 years of research experience and has been managing the Baron Partners Fund since April 2003. Michael Baron joined as co-manager in August 2018, bringing 19 years of research experience. The Baron family owns Baron Capital Group, creating strong alignment between management and shareholder interests. BAMCO, Inc. manages approximately $38.1 billion across 39 discretionary accounts as of February 2025, employing 208 people with a 43-year track record in growth investing.
Baron Capital's investment philosophy emphasizes long-term investments in great people building great businesses with significant opportunities for growth, sustainable competitive advantages, exceptional management, and attractive valuations. The approach involves breaking businesses down to their fundamentals, reconstructing analysis to understand true growth drivers, and investing with high conviction based on original, in-depth research. The firm initiates positions only when analysis suggests the stock can double in value over four years, reflecting a disciplined, conviction-based investment style with a patient, multi-year investment horizon.
Lead Portfolio Manager
Andrew Peck
Managing Partner
High Conviction Bullish
Market Conviction
The Fund demonstrates high conviction through extreme concentration with 28 total positions, 74.1% in the top 10, and 32.9% in a single position (SpaceX). The managers explicitly name and size holdings, stating SpaceX is 'currently worth approximately $6.3 billion' and providing detailed position-level commentary. They use declarative language like 'we believe' and 'we are confident' throughout, and explicitly state they are 'retaining conviction despite near-term pressure' in challenged holdings. The letter provides specific, falsifiable catalysts with clear reasoning for each major position. However, the score is not at the extreme 0.90+ level because the Fund holds 28 positions rather than single-digit concentration, and some hedging language appears when discussing near-term uncertainties. The conviction is very high but not at Berkshire-style single-thesis levels.
Growth Outlook
Market outlook remains above average conviction: Baron Asset Fund outpaced its benchmark by 11.59% in Q4 2025, driven by private-market gains in SpaceX and xAI. The fund is actively repositioning into high-quality growth compound...
Risk Appetite
Risk appetite posture is above average conviction: Baron Asset Fund outpaced its benchmark by 11.59% in Q4 2025, driven by private-market gains in SpaceX and xAI. The fund is actively repositioning into high-quality growth compound...
Capital Deployment
The letter provides no explicit data on cash level changes during the quarter. The managers describe 'retaining conviction' in existing positions and note that portfolio companies are repurchasing shares, but do not indicate the Fund itself deployed significant new capital or raised cash. The discussion focuses on holding through volatility rather than adding or trimming. Leverage remained at 6.6% with no indication of change. The letter mentions early Q3 performance improvements but does not state the Fund added to positions during those moves. This represents capital rotation and position monitoring rather than net deployment or de-risking, scoring near neutral.
Forward Guidance
Forward guidance signal: Baron Asset Fund outpaced its benchmark by 11.59% in Q4 2025, driven by private-market gains in SpaceX and xAI. The fund is actively repositioning into high-quality growth compound...
Language Signal
The letter contains a balanced mix of bullish and cautious language. Bullish terms include 'exceptional,' 'substantial outperformance,' 'landmark,' 'robust,' 'attractive,' 'meaningfully undervalues,' and 'tremendous progress.' However, there is significant bearish and risk language including 'pressure,' 'declined,' 'concerns,' 'disruption,' 'headwinds,' 'weighed,' 'compressed,' 'depressed valuations,' 'cautious,' and 'shoot first and ask questions later.' The letter dedicates substantial space to explaining why challenged holdings declined and defending the investment thesis, which introduces defensive language. The net balance leans modestly positive given the strong performance discussion and conviction statements, but the extensive discussion of risks and challenges prevents a higher score.
Perceived Risk
Perceived risk level is evaluated as moderate conviction. Baron Asset Fund outpaced its benchmark by 11.59% in Q4 2025, driven by private-market gains in SpaceX and xAI. The fund is actively repositioning into high-quality growth compound...
Opportunity Density
The managers describe a selective opportunity environment. They see 'massive addressable markets' in specific areas like space infrastructure and AI but also note that 'several holdings across our Core Growth, Financials, and Real/Irreplaceable Assets categories weighed on returns' due to market concerns. The letter emphasizes finding value in out-of-favor names trading at 'depressed valuations' rather than discovering abundant new opportunities across the market. They describe current valuations in challenged holdings as attractive but do not characterize the broader market as rich with opportunities. The tone suggests selectivity and patience rather than an abundance of compelling ideas, placing this in the moderate selective range.
Time Horizon
The Fund demonstrates a multi-year investment horizon with explicit long-term framing. The managers state they 'seek to invest in businesses we believe can double in value within five or six years' and 'invest for the long term.' They emphasize that SpaceX is 'only just getting started' despite already being a $2.2 trillion company, and describe Tesla's capex cycle as 'a critical investment in the company's long-term competitive position.' The letter includes extensive historical performance analysis going back to 1992 and discusses performance across full economic cycles. However, the Fund is not permanent capital and does have quarterly reporting and redemption features, preventing a score above 0.85. The time horizon is clearly multi-year with 3-5 year thesis timeframes for major holdings, placing this in the upper range but below permanent capital structures.
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Key Catalysts
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