Baron Capital, an investment management company, released its Q1 2026 investor letter for the “Baron Asset Fund”. A copy of the letter is available to download here. U.S. equity markets started the year on a positive note. In February, market dynamics changed due to concerns about AI disruption, accelerated by U.S. and Israeli military action in Iran in March, raising fears of higher oil prices. The Fund declined 7.81% (Institutional Shares) for the quarter, versus a 6.35% decline in the Russell Midcap Growth Index. Performance was adversely impacted by overexposure to the software and services sectors and underexposure to the energy industries. Despite this, the Firm remains optimistic about the market recognizing high-quality businesses owned by the Fund, given their resilience against perceived AI threats. In addition, please check the Fund’s top five holdings to know its best picks in 2026.
In its first-quarter 2026 investor letter, Baron Asset Fund highlighted Vulcan Materials Company (NYSE:VMC) as a newly added position. Vulcan Materials Company (NYSE:VMC) is a US-based producer and supplier of construction aggregates. On May 13, 2026, Vulcan Materials Company (NYSE:VMC) closed at $274.54 per share. One-month return of Vulcan Materials Company (NYSE:VMC) was -3.93%, and its shares gained 1.28% over the past 52 weeks. Vulcan Materials Company (NYSE:VMC) has a market capitalization of $35.62 billion.
Baron Asset Fund stated the following regarding Vulcan Materials Company (NYSE:VMC) in its Q1 2026 investor letter:
“Vulcan Materials Company (NYSE:VMC) supplies the basic raw materials required for most construction and infrastructure development. Vulcan is the largest producer of construction aggregates in the U.S., generating approximately 90% of its gross profit from mining, processing, and transporting crushed stone, sand, and gravel (collectively, “aggregates”) from quarries that it owns. The balance of its gross profit is derived from strategically located ready-mix concrete and asphalt. Vulcan’s products are sold and utilized in infrastructure projects such as roads, highways and bridges, as well as in residential and non-residential construction.
We believe that aggregates are an attractive business because of the industry’s high barriers to entry and strong pricing trends. Permits to open new quarries are difficult to obtain, and the approval process typically takes 5 to 10 years. This limits new competition and keeps supply constrained, which puts the companies that own existing quarries in an advantageous position. In addition, a high weight-to-price ratio makes transportation expensive relative to the cost of the aggregates, limiting the distance that materials can be shipped economically. As a result, aggregates producers have historically enjoyed significant pricing power. In the last 30 years, pricing of aggregates has increased, on average, 4% per year…” (Click here to read the full text)
Vulcan Materials Company (NYSE:VMC) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 68 hedge fund portfolios held Vulcan Materials Company (NYSE:VMC) at the end of the fourth quarter, up from 54 in the previous quarter. While we acknowledge the risk and potential of Vulcan Materials Company (NYSE:VMC) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Vulcan Materials Company (NYSE:VMC) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Vulcan Materials Company (NYSE:VMC) and shared the list of best cement stocks to buy for the long term. In addition, please check out our hedge fund investor letters Q1 2026 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
