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 Equinix, Inc. (NASDAQ:EQIX). Equinix, Inc. (NASDAQ:EQIX) is a digital infrastructure company. The one-month return of Equinix, Inc. (NASDAQ:EQIX) is -1.94%, and its shares have lost 4.33% of their value over the last 52 weeks. On August 1, 2025, Equinix, Inc. (NASDAQ:EQIX) stock closed at $771.75 per share, with a market capitalization of $75.527 billion.
Baron Real Estate Fund stated the following regarding Equinix, Inc. (NASDAQ:EQIX) in its second quarter 2025 investor letter:
“In the most recent quarter, we purchased additional shares in Equinix, Inc. (NASDAQ:EQIX), the premier global operator of 270 network-dense, carrier-neutral colocation data centers with operations across 36 countries and 6 continents. We acquired shares at what we believed were compelling valuation levels. Shares retrenched, however, in the last few days of the quarter due to the company outlining incremental capital investments at its bi-annual Investor Day that will depress near-term growth but pay dividends longer term.
Though we are encouraged by the expanding growth drivers for Equinix, management’s updated five-year earnings growth outlook was below investor expectations. While top-line growth is encouraging, the company is ramping up capital investments over the next several years, which will dampen per share cash flow growth over the next two years, in particular. This led to a material initial sell-off in the shares. While the near-term growth prospects are disappointing and below our expectations as well, we believe the company is taking the right steps to position the business for higher growth ahead. Given Equinix needs to bring on new data center facilities to fulfill the demand signals they are seeing from customers, there is an initial drag on earnings while the data center is built and then stabilized. We bucket our current view of Equinix in the Baron investment framework where the company is taking “short term pain for long-term gain.” Equinix has built a highly valuable inter-connected ecosystem and thus enjoys premium pricing and outsized returns on capital. Furthermore, the balance sheet remains well-positioned to fund this investment with ample debt capacity and no need for external equity.”
A team of IT professionals working on a digital platform, indicating the company’s agile digital services.
Equinix, Inc. (NASDAQ:EQIX) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 70 hedge fund portfolios held Equinix, Inc. (NASDAQ:EQIX) at the end of the first quarter which was 56 in the previous quarter. Equinix, Inc. (NASDAQ:EQIX) reported revenues of $2.26 billion in Q2 2025, representing an increase of 5% year-over-year. While we acknowledge the risk and potential of Equinix, Inc. (NASDAQ:EQIX) 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 EQUINIX, INC. (NASDAQ:EQIX) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Equinix, Inc. (NASDAQ:EQIX) and shared the list of top AI stocks with huge upside potential. 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.
