Baron Capital, an investment management company, released its Q1 2026 investor letter for the “Baron Focused Growth Fund”. A copy of the letter can be downloaded here. The Baron Focused Growth Fund® (the Fund) experienced a challenging start to 2026, declining 4.99% (Institutional Shares) compared to a 3.52% drop in the Russell 2500 Growth Index (the Benchmark). Concerns regarding the influence of AI on the portfolio and the potential effects of the conflict in Iran on inflation, interest rates, and consumer spending have impacted the Fund’s performance this quarter. The Fund continues to focus on long-term investments in growth-oriented businesses with competitive advantages and manages a balanced portfolio of uncorrelated businesses to reduce risk and aim for strong excess returns. As of March 31, 2026, the top 10 holdings represented 58.4% of net assets. 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 Focused Growth Fund highlighted stocks like Choice Hotels International, Inc. (NYSE:CHH). Choice Hotels International, Inc. (NYSE:CHH) is a multinational hospitality company that operates through Hotel Franchising & Management and Corporate & Other segments. On April 24, 2026, Choice Hotels International, Inc. (NYSE:CHH) stock closed at $119.07 per share. One-month return of Choice Hotels International, Inc. (NYSE:CHH) was 17.61%, and its shares lost 5.32% over the past 52 weeks. Choice Hotels International, Inc. (NYSE:CHH) has a market capitalization of $5.45 billion.
Baron Focused Growth Fund stated the following regarding Choice Hotels International, Inc. (NYSE:CHH) in its Q1 2026 investor letter:
“Global hotel franchisor Choice Hotels International, Inc. (NYSE:CHH) contributed to performance during the quarter as the company saw a slight acceleration in revenue per available room across its portfolio. Choice continues to grow units at a low-single-digit rate and is benefiting from higher royalty rates on new franchise contracts, driving mid-single-digit growth in earnings and free cash flow. The company is using this cashflow to return capital through share repurchases. We continue to believe the stock offers compelling value, trading at a roughly five multiple-point discount to its historical average. Choice maintains a strong balance sheet, providing flexibility for additional share buybacks, particularly when the stock trades below the company’s view of intrinsic value. Choice’s steady growth profile, both domestically and internationally, should further support attractive shareholder returns over time.”
Choice Hotels International, Inc. (NYSE:CHH) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 33 hedge fund portfolios held Choice Hotels International, Inc. (NYSE:CHH) at the end of the fourth quarter, up from 31 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 most undervalued hotel stocks to invest in. 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.
