Here’s Why Baron Real Estate Fund Bought Airbnb (ABNB)

Baron Funds, an investment management company, released its “Baron Real Estate Fund” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. The fund rose 3.61% (Institutional Shares) in the quarter compared to a 1.46% decline for the MSCI US REIT Index (the REIT Index) and a 6.13% gain for the MSCI USA IMI Extended Real Estate Index (the MSCI Real Estate Index). 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 Real Estate Fund highlighted stocks such as Airbnb, Inc. (NASDAQ:ABNB). Headquartered in San Francisco, California, Airbnb, Inc. (NASDAQ:ABNB) operates a platform that connects hosts and guests. The one-month return of Airbnb, Inc. (NASDAQ:ABNB) was -6.21%, and its shares lost 0.16% of their value over the last 52 weeks. On August 1, 2025, Airbnb, Inc. (NASDAQ:ABNB) stock closed at $128.02 per share, with a market capitalization of $79.016 billion.

Baron Real Estate Fund stated the following regarding Airbnb, Inc. (NASDAQ:ABNB) in its second quarter 2025 investor letter:

“During the most recent quarter, we initiated a new position in Airbnb, Inc. (NASDAQ:ABNB). We have been following and meeting with the company since its IPO in 2020 and took advantage of the indiscriminate sell-off in April to buy a high-quality company that was on sale with a favorable risk/reward setup under a wide range of economic scenarios. Airbnb is the largest technology-enabled hospitality platform in the world with 8 million listings and 5 million hosts across 220 countries and 100,000 cities. We are optimistic regarding the multi-year prospects for Airbnb due to: i) its leading share in alternative accommodations and scale driving strong brand awareness and repeat bookings; ii) 90% direct traffic allowing for lower customer acquisition costs; iii) its strong value proposition to both guests and hosts, leading to differentiated listings and exclusive inventory; iv) a unique two sided marketplace of user reviews curating an ecosystem of trust between guests and hosts; and, v) imbedded free call options with the company’s recently launched experiences, services, and other incremental products to be introduced in the coming years (e.g. longer-term stay apartments, host services, partnerships).”

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A vacation home luxury bedroom setup with stunning decor showing a desired getaway experience.

Airbnb, Inc. (NASDAQ:ABNB) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 66 hedge fund portfolios held Airbnb, Inc. (NASDAQ:ABNB) at the end of the first quarter, compared to 54 in the previous quarter. Airbnb, Inc. (NASDAQ: ABNB) reported a revenue of $2.3 billion in the first quarter of 2025, which represents a 6% increase compared to Q1 2024. While we acknowledge the risk and potential of Airbnb, Inc. (NASDAQ:ABNB) 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 AIRBNB, INC. (NASDAQ:ABNB) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered Airbnb, Inc. (NASDAQ:ABNB) and shared Madison Large Cap Fund’s views on the company. 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.