Baron Fund, an investment management company, released its Q4 2025 letter for “Baron Asset Fund”. A copy of the letter can be downloaded here. Equities experienced a strong fourth quarter, capping off a volatile year. However, the Russell Midcap Growth Index (the Index) ended the quarter down 3.70%. In this environment, the Baron Asset Fund returned 7.89% (Institutional Shares), surpassing the Index by 11.59 percentage points. Favorable stock selection led to the outperformance of the Fund in the quarter. As of December 31, 2025, the Fund held a total of 53 positions, and the 10 largest holdings represented 52.8% of net assets, and the 20 largest holdings represented 73.3% of net assets. Please review the Fund’s top five holdings to gain insights into their key selections for 2025.
In its fourth-quarter 2025 investor letter, Baron Asset Fund highlighted stocks like Arch Capital Group Ltd. (NASDAQ:ACGL). Arch Capital Group Ltd. (NASDAQ:ACGL) is an insurance company that provides insurance, reinsurance, and mortgage insurance products. On February 9, 2026, Arch Capital Group Ltd. (NASDAQ:ACGL) stock closed at $96.06 per share. One-month return of Arch Capital Group Ltd. (NASDAQ:ACGL) was 5.83%, and its shares are up 7.21% over the past twelve months. Arch Capital Group Ltd. (NASDAQ:ACGL) has a market capitalization of $35.852 billion.
Baron Asset Fund stated the following regarding Arch Capital Group Ltd. (NASDAQ:ACGL) in its fourth quarter 2025 investor letter:
“Strength in Health Care was driven by precision instruments provider Mettler-Toledo International Inc., while favorable stock selection in Financials came from specialty insurer Arch Capital Group Ltd. (NASDAQ:ACGL). Arch’s stock 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. Return on equity of 18% exceeded management’s long-term target, driving 9% growth in book value per share, or 18% growth when adjusted for a special dividend. In addition, a faster pace of share repurchases reduced the share count by 4% year to date, signaling management’s confidence in the company’s valuation.”
Arch Capital Group Ltd. (NASDAQ:ACGL) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 40 hedge fund portfolios held Arch Capital Group Ltd. (NASDAQ:ACGL) at the end of the third quarter, compared to 46 in the previous quarter. While we acknowledge the potential of Arch Capital Group Ltd. (NASDAQ:ACGL) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
