Baron Fund, an investment management company, released its Q4 2025 letter for “Baron Durable Advantage Fund”. A copy of the letter can be downloaded here. The Fund returned 2.6% in the fourth quarter, which mirrored the S&P 500 Index’s 2.7% return. The Fund returned 16.6% in 2025, compared to 17.9% for the Index and 16.1% gain for the Peer Group, Morningstar Large Growth Category average. Moving to 2026, in an environment dominated by geopolitics, changing regulatory trends, and artificial intelligence, the Fund focuses on investing in high-quality, large-cap companies with solid competitive advantages, proven track record, and consistent shareholder returns. 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 Durable Advantage Fund highlighted Meta Platforms, Inc. (NASDAQ:META) as a notable detractor from performance. Meta Platforms, Inc. (NASDAQ:META) is a technology company that develops products to connect people. On February 10, 2026, Meta Platforms, Inc. (NASDAQ:META) stock closed at $670.72 per share. One-month return of Meta Platforms, Inc. (NASDAQ:META) was 8.97%, and its shares lost 7.54% of their value over the last 52 weeks. Meta Platforms, Inc. (NASDAQ:META) has a market capitalization of $1.697 trillion.
Baron Durable Advantage Fund stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its fourth quarter 2025 investor letter:
“Meta Platforms, Inc. (NASDAQ:META), the world’s largest social network, detracted from performance as shares declined 10.0% during the quarter, though still finished 2025 up 13.1%. While Meta reported strong quarterly results with 25% revenue growth (year-on-year in constant currency) and 40% operating margins (both above expectations) and provided solid forward revenue guidance, 2026 capital and operating expenditures guidance was above Street expectations, raising concerns that it may be overspending on AI for less certain returns relative to competitors. While hyperscalers have an existing cloud business, through which they rent out GPUs and can therefore generate a short-term return on their AI spend, Meta doesn’t have a cloud business and so its investment profile is longer duration in nature. Still, we believe Meta continues to benefit from its AI investments across the core business, making improvements in content recommendations (with rising time spent) and in ad targeting and ranking (leading to higher conversions and better return on ad spend). Our industry checks also validate strong advertiser adoption and satisfaction, including in newer areas such as easy-to-use AI creative tools and business messaging. We believe Meta will begin to realize returns from its AI investment or rationalize spending over time. Longer term, Meta’s leadership in mobile advertising, massive user base, innovative culture, leading generative AI research and distribution, and technological scale position it well for continued performance, with additional monetization opportunities ahead in areas such as smart glasses and commerce.”
