Baron Capital, an investment management company, released its Q1 2026 investor letter for the “Baron Discovery Fund”. A copy of the letter can be downloaded here. It was a difficult quarter for Baron Discovery Fund, both on an absolute and relative basis. The Fund declined 10.65% (Institutional Shares) in the quarter, compared to the Russell 2000 Growth Index’s return of -2.81%. The underperformance of 7.88% was primarily attributed to sectors such as Information Technology, Consumer Discretionary, Health Care, and Industrials, along with a lack of exposure to Energy. The Fund sees the current SaaS-pocalypse as an opportunity to invest in compelling prospects among software companies that possess robust and sustainable competitive advantages. 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 Discovery Fund highlighted stocks like Waystar Holding Corp. (NASDAQ:WAY). Waystar Holding Corp. (NASDAQ:WAY) is a technology company that provides software solutions for healthcare payments. On May 7, 2026, Waystar Holding Corp. (NASDAQ:WAY) closed at $21.01 per share. One-month return of Waystar Holding Corp. (NASDAQ:WAY) was -2.28%, and its shares lost 47.49% over the past 52 weeks. Waystar Holding Corp. (NASDAQ:WAY) has a market capitalization of $4.03 billion.
Baron Discovery Fund stated the following regarding Waystar Holding Corp. (NASDAQ:WAY) in its Q1 2026 investor letter:
“Finally, we added to Waystar Holding Corp. (NASDAQ:WAY), which like Heartflow has been lumped into the “AI software losers” bucket. Waystar is a provider of revenue cycle management software to health care providers. The company has an AI driven, end-to-end suite of solutions that saves clients massive amounts of working capital costs by getting claims submitted quickly and correctly, and by automating insurance appeals when necessary. At under 11 times adjusted cash flow, but growing cash flow in the low teens, we believe the company is competitively advantaged and very cheap.”
Waystar Holding Corp. (NASDAQ:WAY) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 46 hedge fund portfolios held Waystar Holding Corp. (NASDAQ:WAY) at the end of the fourth quarter, compared to 47 in the previous quarter. In Q1 2026, Waystar Holding Corp. (NASDAQ:WAY) reported revenue of $314 million, representing 22% year-over-year growth. While we acknowledge the risk and potential of Waystar Holding Corp. (NASDAQ:WAY) 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 Waystar Holding Corp. (NASDAQ:WAY) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Waystar Holding Corp. (NASDAQ:WAY) and shared the list of best healthcare AI stocks to buy according to analysts. 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.
