Baron Funds, an investment management company, released its “Baron Fifth Avenue Growth Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. The fund declined 13.4% (Institutional Shares) in the first quarter compared to a 10.0% decline for the Russell 1000 Growth Index and a 4.3% decrease for the S&P 500 Index. The Fund focuses on investing in Big Ideas, which often trade and can be considered long-duration assets. As a result, the portfolio frequently experiences significant stock price fluctuations, particularly in the short term and during periods of extreme market volatility, while the intrinsic values of businesses remain much more stable. Nevertheless, Q1 was a challenging first quarter. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.
In its first-quarter 2025 investor letter, Baron Fifth Avenue Growth Fund highlighted stocks such as ServiceNow, Inc. (NYSE:NOW). ServiceNow, Inc. (NYSE:NOW) offers intelligent workflow automation solutions for digital businesses. The one-month return of ServiceNow, Inc. (NYSE:NOW) was -4.37%, and its shares gained 32.29% of their value over the last 52 weeks. On June 20, 2025, ServiceNow, Inc. (NYSE:NOW) stock closed at $971.41 per share, with a market capitalization of $201.23 billion.
Baron Fifth Avenue Growth Fund stated the following regarding ServiceNow, Inc. (NYSE:NOW) in its Q1 2025 investor letter:
“Most of our companies have limited or no direct exposure to the U.S. government. ServiceNow is at the high end of the spectrum with 10% to 15% of its revenues coming from government contracts as the key vendor chosen to modernize and digitize government processes. ServiceNow, Inc.’s (NYSE:NOW) software platform has a best-in-class 98% retention rate and is, in our view, one of the major beneficiaries of generative AI with over 1,000 current customers using its generative AI products. Still, we have been steadily reducing the size of our investment in ServiceNow ever since the official formation of DOGE.”
A team of software engineers at desks working on code for a cutting-edge cloud computing solution.
ServiceNow, Inc. (NYSE:NOW) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 106 hedge fund portfolios held ServiceNow, Inc. (NYSE:NOW) at the end of the first quarter, which was 110 in the previous quarter. While we acknowledge the potential of ServiceNow, Inc. (NYSE:NOW) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.
In another article, we covered ServiceNow, Inc. (NYSE:NOW) and shared Columbia Threadneedle Global Technology Growth Strategy’s views on the company. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors. While we acknowledge the potential of NOW 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.
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Disclosure: None. This article is originally published at Insider Monkey.
