Baron Capital, an investment management company, released its Q4 2025 letter for its “Baron Real Estate Income Fund”. A copy of the letter can be downloaded here. In 2025, the Fund appreciated 3.74% (Institutional Shares), exceeding the 1.68% gain for the MSCI US REIT Index (the REIT Index). In Q4 2025, the Fund declined modestly by 0.40%, outperforming the Index’s 1.99% decline. In contrast to the substantial double-digit growth delivered in 2023 and 2024, the Fund’s modest performance in 2025 can be attributed to a variety of factors, such as stronger relative growth in several sectors outside of real estate, ongoing interest rate headwinds, and specific REIT subcategory headwinds. As of December 31, 2025, the Fund’s net assets are as follows: REITs (71.2%), non-REIT real estate companies (25.0%), and cash and cash equivalents (3.8%). Also, the Fund currently has investments in 13 REIT categories. Heading into 2026, the Firm is optimistic about the prospects for the stock market and the Baron Real Estate Income Fund. 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 Real Estate Income Fund highlighted stocks like GDS Holdings Limited (NASDAQ:GDS). GDS Holdings Limited (NASDAQ:GDS) is data center developer and operator based in the People’s Republic of China. On April 1, 2026, GDS Holdings Limited (NASDAQ:GDS) closed at $41.66 per share. One-month return of GDS Holdings Limited (NASDAQ:GDS) was 9.32%, and its shares gained 70.67% over the past 52 weeks. GDS Holdings Limited (NASDAQ:GDS) has a market capitalization of $8.35 billion.
Baron Real Estate Income Fund stated the following regarding GDS Holdings Limited (NASDAQ:GDS) in its fourth quarter 2025 investor letter:
“After strong performance in the first nine months of the year, shares of GDS Holdings Limited (NASDAQ:GDS), the leading developer and operator of data centers in China and a fast growing developer and operator of data centers outside of Asia, lagged in the fourth quarter as investors digested the potential timing of the step-up in new business bookings and the associated capital investment required. We continue to see increasing evidence of the AI wave on the cusp of a step-change and further progress being made toward the loosening of chip supply in China that previously hindered data center leasing volumes. We remain long-term bullish on the company due to its undemanding valuation level, blue-chip customer base, valuable capacity in tier-1 markets and imbedded value in its international business demonstrated via private capital raises backed by highly regarded investors.”
GDS Holdings Limited (NASDAQ:GDS) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 47 hedge fund portfolios held GDS Holdings Limited (NASDAQ:GDS) at the end of the fourth quarter, compared to 53 in the previous quarter. While we acknowledge the risk and potential of GDS Holdings Limited (NASDAQ:GDS) 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 GDS Holdings Limited (NASDAQ:GDS) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered GDS Holdings Limited (NASDAQ:GDS) and shared a list of best stocks to buy according to billionaire Rob Citrone. 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.
