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 Nov 10, 2026
Baron Small Cap Fund (Institutional Shares) declined 7.69% net of fees in the third quarter of 2026, outperforming the Russell 2000 Growth Index benchmark decline of 9.39% by 1.70%, while bringing year-to-date net performance to negative 4.30%. The fund remains positioned with significant active overweights in Industrials (30.7% of net assets versus 15.8% for the index) and Consumer Discretionary (13.7% versus 8.7%), roughly market-weight exposure in Information Technology (20.8%) and Financials (10.2%), and a pronounced structural underweight in Health Care (13.1% versus 29.3%) due to a complete exclusion of pre-revenue biotechnology stocks. Cash redeployments during the quarter continued to skew toward small-cap investments, initiating positions at a weighted average market capitalization of $3.6 billion while trimming larger holdings averaging $12.3 billion. Macroeconomic crosscurrents dictated performance divergence across the portfolio, marked by elevated Middle East conflict, crude oil prices exceeding $100 per barrel, persistent inflation prints, and a 25 basis point Federal Reserve interest rate increase that drove 10-year Treasury yields up 50 basis points in September. The resulting risk-off sentiment reversed earlier market breadth and pressured small-cap valuations. However, the fund observed a rotation out of overextended AI infrastructure plays into beaten-down enterprise software and IT services, where robust underlying software demand dispelled widespread market narratives surrounding generative AI disintermediation. Key positive stock contributors included enterprise application software leader Intapp, food and animal safety supplier Neogen Corp., and take-private target The Baldwin Insurance Group. Detractors were concentrated in data center infrastructure provider Vertiv Holdings, Las Vegas locals casino operator Red Rock Resorts, and food processing systems provider JBT Marel. Notable portfolio activity featured a new IPO entry in modular data center infrastructure provider Accelevation Holdings Corp., while harvesting long-term capital from a complete exit of The Cheesecake Factory following a 25-year compounding cycle.
Invest long-term in exceptional, high-quality small-cap growth businesses with dominant competitive advantages, high returns on capital, and durable reinvestment runways, holding core winners through multi-year compounding cycles.
The economy is expected to remain resilient without entering an interest-rate-driven recession, setting the stage for accelerating earnings growth across portfolio companies. Disproportionately cheap valuations and record corporate buybacks suggest the multi-year pendulum favoring large caps is primed to reverse in favor of high-quality small-cap equities.
Moderate Conviction Bullish
Market Conviction
Growth Outlook
Risk Appetite
Capital Deployment
Forward Guidance
Language Signal
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Opportunity Density
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Top Conviction Themes
Key Catalysts
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