Baron Funds, an investment management company, released its “Baron Fifth Avenue Growth Fund” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. In Q3 2025, the fund gained 5.7% (Institutional Shares) compared to the Russell 1000 Growth Index’s (R1KG) 10.5% gain and the S&P 500 Index’s (SPX) 8.1% return. The fund is up 14.4% YTD compared to 17.2% and 14.8% for the indexes. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.
In its third-quarter 2025 investor letter, Baron Fifth Avenue Growth Fund highlighted stocks such as KKR & Co. Inc. (NYSE:KKR). KKR & Co. Inc. (NYSE:KKR) is an equity and real estate investment firm. The one-month return of KKR & Co. Inc. (NYSE:KKR) was 3.30%, and its shares lost 22.62% of their value over the last 52 weeks. On December 01, 2025, KKR & Co. Inc. (NYSE:KKR) stock closed at $122.19 per share, with a market capitalization of $113.138 billion.
Baron Fifth Avenue Growth Fund stated the following regarding KKR & Co. Inc. (NYSE:KKR) in its third quarter 2025 investor letter:
We increased the size of our position in KKR & Co. Inc. (NYSE:KKR), as we took advantage of price volatility towards the end of the quarter. KKR is a leading alternative asset manager. The company manages $686 billion in assets across a diverse range of strategies in Private Equity (PE), Private Credit, and Real Assets. The company is in the middle of a three-year fundraising super-cycle, in which it expects to raise over $300 billion in new capital. KKR is a prime example of the shifting trends in the alternative asset management industry. Historically, the industry was characterized as buyout PE, typically in North America and Europe, while nowadays, alternative asset classes have significantly expanded including Real Estate, Infrastructure, and Private Credit. We think KKR will continue to be an industry leader as it has successfully diversified its business beyond PE into these other asset classes, and now boasts three scaled businesses (PE, Private Credit and Real Assets) that are each over $150 billion in asssets under management and continuing to grow. Alongside the Asset Management business which generates highly recurring fees, KKR also has a large insurance company, Global Atlantic, which participates in the growing market for retirement assets, and a collection of long-term holdings in private business called Strategic Holdings.
We think KKR is poised to leverage its scale, strong track record, and relationships to continue building on this foundation as it scales towards $1 trillion in assets. This includes a more nascent opportunity in Private Wealth, where KKR is partnering with existing large firms such as Capital Group to rapidly scale its distribution capabilities. This is an investor class that has historically not been well served by alternative asset managers (aside from ultra-high-net-worth) and so presents a large growth potential, with retail assets estimated to be $150 trillion. We took advantage of a sell-off in the stock to add to our position, which was related to some concerns over potential weakness in Private Credit given bankruptcy headlines around one or two companies, although our belief is that these companies’ debt was not actually underwritten in the private markets. As compared to peers, we think KKR has arguably the most diverse earnings stream given its scale with multiple business models helping drive earnings growth, which we think gives the company many ways to win over the long term, across macroeconomic cycles.”
KKR & Co. Inc. (NYSE:KKR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 89 hedge fund portfolios held KKR & Co. Inc. (NYSE:KKR) at the end of the third quarter, up from 84 in the previous quarter. While we acknowledge the risk and potential of KKR & Co. Inc. (NYSE:KKR) 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 KKR & Co. Inc. (NYSE:KKR) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered KKR & Co. Inc. (NYSE:KKR) and shared the list of stocks Wall Street analysts are watching closely. 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.
