Baron Funds, an investment management company, released its “Baron Discovery Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. In the first quarter, the fund was down 6.17% (Institutional Shares), outperforming the -11.12% return for the Russell 2000 Growth Index. The market began strong in February but faded due to Trump’s serious tariff enactment, which the market perceives as inflationary and slowing economic growth. The decline accelerated after April 2nd, causing fears of a trade war and global recession. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its first-quarter 2025 investor letter, Baron Discovery Fund highlighted stocks such as Axon Enterprise, Inc. (NASDAQ:AXON). Axon Enterprise, Inc. (NASDAQ:AXON) manufactures conducted energy devices (CEDs) under the TASER brand. The one-month return of Axon Enterprise, Inc. (NASDAQ:AXON) was 33.63%, and its shares gained 157.79% of their value over the last 52 weeks. On May 19, 2025, Axon Enterprise, Inc. (NASDAQ:AXON) stock closed at $742.32 per share with a market capitalization of $57.788 billion.
Baron Discovery Fund stated the following regarding Axon Enterprise, Inc. (NASDAQ:AXON) in its Q1 2025 investor letter:
“We will miss our investment in Axon Enterprise, Inc. (NASDAQ:AXON). Axon is a truly fantastic company, with an incredible management team, and has been one of the best investments we have ever made. Our rationale in selling our investment was two-fold. First, we believed at the time we sold that valuation had exceeded our long-term estimates. Second, the company’s market capitalization at over $50 billion had become too large for our small-cap mandate. The Fund’s investors reaped huge returns from Axon. Our initial investment in January 2022 was made when the company traded at $128 per share, with our last sale at over $700 per share. This is exactly the type of company we want to find, and we believe it benefits our investors that we have the flexibility to hold companies even as they become mid-caps as long as the overall market cap in the Fund remains in the small-cap domain. Our work on this investment has also benefited other Baron Funds that continue to hold the investment, and we suspect that this will become an even larger company over time.”
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Axon Enterprise, Inc. (NASDAQ:AXON) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 64 hedge fund portfolios held Axon Enterprise, Inc. (NASDAQ:AXON) at the end of the fourth quarter compared to 46 in the third quarter. In the first quarter, Axon Enterprise, Inc.’s (NASDAQ:AXON) revenue grew 31% year-over-year to $604 million. While we acknowledge the potential of Axon Enterprise, Inc. (NASDAQ:AXON) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.
In another article, we covered Axon Enterprise, Inc. (NASDAQ:AXON) and shared the list of stocks with consistent growth you want to buy. In addition, please check out our hedge fund investor letters Q1 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.
