Baron Funds, an investment management company, released its “Baron Global Advantage Fund” investor letter for the second quarter of 2025. A copy of the letter can be downloaded here. In the second quarter, the fund returned 22.7% (Institutional Shares), compared to the MSCI ACWI Index’s (the Index) 11.5% gain and the MSCI ACWI Growth Index’s 17.3% gain. The Fund is up 11.2%, year-to-date, compared to gains of 10.1% and 9.3% for the benchmarks, respectively. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its second-quarter 2025 investor letter, Baron Global Advantage Fund highlighted stocks such as MercadoLibre, Inc. (NASDAQ:MELI). MercadoLibre, Inc. (NASDAQ:MELI) is an online commerce platform that operates Mercado Libre Marketplace and Mercado Pago FinTech platforms. The one-month return of MercadoLibre, Inc. (NASDAQ:MELI) was -3.26%, and its shares gained 32.34% of their value over the last 52 weeks. On August 4, 2025, MercadoLibre, Inc. (NASDAQ:MELI) stock closed at $2,395.83 per share, with a market capitalization of $121.462 billion.
Baron Global Advantage Fund stated the following regarding MercadoLibre, Inc. (NASDAQ:MELI) in its second quarter 2025 investor letter:
“MercadoLibre, Inc. (NASDAQ:MELI) had a maximum drawdown of 21%, likely driven by a decision to reduce its minimum threshold for free shipping (as well as the general market weakness). We liked the initiative, which we think could drive up purchase frequency, since MELI customers on average buy 9 to 10 times per year, versus almost 50 times for Amazon. The rapid improvement in Argentina’s economy is beneficial to MELI, by far the largest e-commerce player in the country with around 65% market share (next player is less than 10%) and the country has a significant runway for e-commerce penetration which is still only in the mid-teens. In fintech, MELI has seen strong, broad-based growth with 43% year-on-year growth in total payments volume (TPV), 75% growth in the credit portfolio, and 111% growth in credit cards, while also increasingly becoming the main bank for customers as it attracts deposits. Our estimate of MELI’s intrinsic value has risen considerably over time.
MercadoLibre, Inc., the leading e-commerce marketplace across Latin America, contributed to performance as shares rose 34.0%. Performance was driven by better-than-expected quarterly results across gross merchandise value (GMV) – up 40% year-on-year, TPV – up 43%, revenues – up 37%, and EBIT margin up 70bps to 12.9%. The margin outperformance was driven largely by Argentina, where revenues grew to 34% of the total in 1Q25 (up from 14% a year ago) while Argentina is structurally more profitable than other geographies. This helped offset expected margin pressure from ongoing investments in new distribution centers and the expansion of the credit card portfolio. Management noted solid business momentum in Argentina, supported by a more favorable macro backdrop, including falling interest rates that are boosting credit demand, lowering funding costs, and driving higher consumption. In 1Q25, the number of items sold in Argentina rose 52% year-over year, and MELI continues to gain GMV share in the region. We remain excited about the company’s long-term prospects given the still-low penetration of e-commerce and financial services in Latin America, and MELI’s category leadership in both segments.”
A customer using their phone to access an online commerce platform.
MercadoLibre, Inc. (NASDAQ:MELI) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 108 hedge fund portfolios held MercadoLibre, Inc. (NASDAQ:MELI) at the end of the first quarter which was 96 in the previous quarter. While we acknowledge the risk and potential of MercadoLibre, Inc. (NASDAQ:MELI) 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 MERCADOLIBRE, INC. (NASDAQ:MELI) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered MercadoLibre, Inc. (NASDAQ:MELI) and shared the list of best growth stocks to buy for the next 10 years. In addition, please check out our hedge fund investor letters Q2 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.
