Baron Funds, an investment management company, released its “Baron Focused Growth Fund” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. The Fund maintained its strong relative performance from the first quarter into the second quarter, with overall performance improving as it completely recovered from the losses experienced earlier, which were related to economic concerns stemming from newly implemented tariffs by the administration. Most of the firm’s company management teams expect the tariffs to have a minimal impact, as costs will likely be shared with suppliers and passed through in small price increases that won’t significantly affect demand. As a result of this clarity, the fund appreciated by 12.78% (Institutional Shares) compared to an 11.31% gain for the Russell 2500 Growth Index. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its second-quarter 2025 investor letter, Baron Focused Growth Fund highlighted stocks such as Choice Hotels International, Inc. (NYSE:CHH). Headquartered in North Bethesda, Maryland, Choice Hotels International, Inc. (NYSE:CHH) operates as a hotel franchisor. The one-month return of Choice Hotels International, Inc. (NYSE:CHH) was -2.88%, and its shares gained 0.56% of their value over the last 52 weeks. On July 31, 2025, Choice Hotels International, Inc. (NYSE:CHH) stock closed at $127.71 per share, with a market capitalization of $5.926 billion.
Baron Focused Growth Fund stated the following regarding Choice Hotels International, Inc. (NYSE:CHH) in its second quarter 2025 investor letter:
“Choice Hotels International, Inc. (NYSE:CHH) is a global franchisor of economy and midscale hotels across a portfolio of well-known brands. Shares fell during the quarter as investors focused on slowing RevPAR growth. However, management has steadily reduced Choice’s exposure to RevPAR fluctuations by expanding higher-margin, non RevPAR fee income as it leverages the company’s 70-million-member loyalty database to secure additional partnerships with credit card companies, timeshare operators, and casinos. Choice is also adding higher-revenue units at a low single-digit rate, with a focus on larger room sizes, premium royalty rates, and RevPAR levels that exceed the current portfolio. We expect revenue growth to accelerate as a robust pipeline of new projects come online and Choice captures synergies from its Radisson Americas acquisition by increasing traffic to those properties and narrowing the royalty-rate gap between Radisson and legacy Choice brands. With a strong balance sheet, Choice is well positioned to return capital to shareholders through dividends and share repurchases.
Shares of Choice, a global franchisor of economy and midscale hotels across a portfolio of well-known brands declined 4.49% and hurt performance by 14 basis points. Shares fell during the quarter as investors were concerned with slowing revenue-per-available room (RevPAR) growth. However, management has steadily reduced Choice’s exposure to RevPAR fluctuations by expanding higher margin, non-RevPAR fee income as it leverages the company’s 70 million member loyalty database to secure additional partnerships with credit card companies, timeshare operators, and casinos. Choice is also adding higher-revenue units at a low single-digit rate, with a focus on larger room sizes, premium royalty rates, and RevPAR levels that exceed the current portfolio. We expect revenue growth to accelerate as a robust pipeline of new projects come online and Choice captures synergies from its Radisson Americas acquisition by increasing traffic to those properties and narrowing the royalty rate gap between Radisson and legacy Choice brands. With a strong balance sheet, Choice is well positioned to return capital to shareholders through dividends and share repurchases.”
A hotel lobby in vibrant colors, reflecting the hospitality and global presence of the hotel franchising company.
Choice Hotels International, Inc. (NYSE:CHH) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 24 hedge fund portfolios held Choice Hotels International, Inc. (NYSE:CHH) at the end of the first quarter, which was 18 in the previous quarter. While we acknowledge the risk and potential of Choice Hotels International, Inc. (NYSE:CHH) 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 Choice Hotels International, Inc. (NYSE:CHH) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Choice Hotels International, Inc. (NYSE:CHH) and shared the list of underperforming stocks targeted by short sellers. In addition, please check out our hedge fund investor letters Q2 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.
