Do You Believe in the Growth Potential of Legence Corp. (LGN)?

Baron Funds, an investment management company, released its “Baron Small Cap Fund” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the third quarter of 2025, the fund was up 0.54% (Institutional Shares) compared to the Russell 2000 Growth Index’s (the Index) 12.19% return. Year to date, the Fund is up 0.91% compared to the index’s 11.65% return. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its third-quarter 2025 investor letter, Baron Small Cap Fund highlighted stocks such as Legence Corp. (NASDAQ:LGN). Legence Corp. (NASDAQ:LGN) engages in the engineering, installation, and maintenance services for mission-critical systems in buildings. The one-month return of Legence Corp. (NASDAQ:LGN) was 16.93%. On November 6, 2025, Legence Corp. (NASDAQ:LGN) stock closed at $36.54 per share, with a market capitalization of $3.844 billion.

Baron Small Cap Fund stated the following regarding Legence Corp. (NASDAQ:LGN) in its third quarter 2025 investor letter:

“We initiated a position in Legence Corp. (NASDAQ:LGN) when the company went public in September. Legence is a leading provider of engineering, installation, and maintenance services for mission-critical systems in buildings. Legence has more than 60% of the companies in the Nasdaq-100 Index as clients, mostly in high-growth sectors that necessitate technically demanding buildings (i.e., no retail or multi-family). We think Legence is positioned to grow rapidly as data centers, manufacturers, pharmaceutical companies, hospitals, schools, and universities make investments in new and existing facilities to support growing demand and make them more energy efficient and sustainable.”

Legence’s service offering focuses on complex systems including HVAC, process piping, and other mechanical, electrical, and plumbing (MEP) for new and existing facilities. The company is comprised of a highly specialized workforce, including 1,200 MEP engineers and energy consultants and approximately 3,400 HVAC and plumbing service technicians, fitters, electricians, and sheet metal workers. Legence combines both design and build services on a national scale, while the competition typically offers either engineering or installation and only on a regional basis. Legence has lengthy relationships with its top 10 clients, exceeding 26 years on average, evidence of the value the company provides…” (Click here to read the full text)

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Legence Corp. (NASDAQ:LGN) is not on our list of 30 Most Popular Stocks Among Hedge Funds. While we acknowledge the risk and potential of Legence Corp. (NASDAQ:LGN) 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 Legence Corp. (NASDAQ:LGN) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In addition, please check out our hedge fund investor letters Q3 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.