Baron Capital, an investment Management Company, released its fourth quarter 2025 investor letter for its “Baron Opportunity Fund”. A copy of the letter can be downloaded here. The Fund returned 4.63% (Institutional Shares) in Q4 2025, outperforming the Russell 3000 Growth Index’s (the Benchmark) 1.14% gain and the S&P 500 Index’s 2.66% return. The Fund appreciated 19.73% for the full year, surpassing the benchmark’s 18.15% and the S&P’s 17.88% returns. A turbulent year ended with moderate improvements in the fourth quarter. Moderating tariff impacts, robust corporate earnings, and continued monetary easing supported fourth-quarter gains. The Fund management focuses on prioritizing significant secular growth trends, including AI, space exploration and technology, autonomous transportation, robotics, digital commerce, media, finance, advanced therapeutics, and minimally invasive surgery that disrupt businesses and create long-term profitable growth opportunities. This focus led to the Fund’s outperformance in the year. In addition, please check the Fund’s top five holdings to know its best picks in 2025.
In its fourth-quarter 2025 investor letter, Baron Opportunity Fund highlighted stocks like Duolingo, Inc. (NASDAQ:DUOL). Duolingo, Inc. (NASDAQ:DUOL) is an education technology company that specializes in language learning. On March 17, 2026, Duolingo, Inc. (NASDAQ:DUOL) stock closed at $104.36 per share. One-month return of Duolingo, Inc. (NASDAQ:DUOL) was -7.20%, and its shares lost 65.34% over the past 52 weeks. Duolingo, Inc. (NASDAQ:DUOL) has a market capitalization of $4.9 billion.
Baron Opportunity Fund stated the following regarding Duolingo, Inc. (NASDAQ:DUOL) in its fourth quarter 2025 investor letter:
“We decided to sell our position in Duolingo, Inc. (NASDAQ:DUOL) this quarter before the company reported third quarter earnings. Our thesis in Duolingo was that given how large the opportunity was for global language learning, the company could continue to grow users at rates well north of 25% for years to come. We had previously considered decelerating user metrics to be a temporary result of a brief reduction in marketing spend following social media backlash related to the company’s AI posts. However, early in the quarter, our research indicated that the user slowdown continued unabated. In its earnings report, management signaled growth concerns by acknowledging the trend through October and choosing to delay monetization levers, resulting in a meaningful deceleration in bookings growth. We believe this decision would not have been necessary if organic growth had remained more robust. Shares of Duolingo are down meaningfully since the report and our sale.”
Duolingo, Inc. (NASDAQ:DUOL) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 51 hedge fund portfolios held Duolingo, Inc. (NASDAQ:DUOL) at the end of the fourth quarter, up from 50 in the previous quarter. While we acknowledge the risk and potential of Duolingo, Inc. (NASDAQ:DUOL) 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 Duolingo, Inc. (NASDAQ:DUOL) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Duolingo, Inc. (NASDAQ:DUOL) and shared a list of best get rich quick stocks to buy according to hedge funds. In addition, please check out our hedge fund investor letters Q4 2025 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.
