Baron Funds, an investment management company, released its “Baron Opportunity Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. In the first quarter, the fund fell 11.97% (Institutional Shares), underperforming the Russell 3000 Growth Index, which fell 10.00%, and the S&P 500 Index, which declined 4.27%. The market is a confidence game. January saw a strong performance for the Fund, driven by investor optimism in technological innovation, particularly AI. Expectations of the Trump administration’s policies also fueled hopes for economic growth. However, by mid-February, sentiment shifted. Fears of tariffs, a potential global trade war, and geopolitical realignment reversed market gains, creating volatility similar to the COVID crisis or the Great Financial Crisis. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.
In its first-quarter 2025 investor letter, Baron Opportunity Fund highlighted stocks such as Monolithic Power Systems, Inc. (NASDAQ:MPWR). Monolithic Power Systems, Inc. (NASDAQ:MPWR) is a semiconductor-based power electronics solutions provider. The one-month return of Monolithic Power Systems, Inc. (NASDAQ:MPWR) was 3.13%, and its shares lost 16.00% of their value over the last 52 weeks. On June 18, 2025, Monolithic Power Systems, Inc. (NASDAQ:MPWR) stock closed at $693.24 per share, with a market capitalization of $33.19 billion.
Baron Opportunity Fund stated the following regarding Monolithic Power Systems, Inc. (NASDAQ:MPWR) in its Q1 2025 investor letter:
“Monolithic Power Systems, Inc. (NASDAQ:MPWR) is a fabless high-performance analog and power semiconductor company serving diverse end markets across the semiconductor industry. Despite consistently growing 10% to 15% above the industry for many years, MPS is still a relatively small player in the broader analog and power management industries. It leverages its deep system-level and applications knowledge, strong design experience, and innovative process technologies to provide highly integrated, energy efficient, cost effective, and easy-to-use monolithic products to its customers. We have owned the company in the past and took advantage of recent volatility in the stock tied to confusion around its positioning as a supplier to AI servers to repurchase a position at attractive prices.
The company continues to expand its addressable market and drive strong revenue growth by taking advantage of areas where competition fails to innovate and driving even deeper integration of its products, including a bigger emphasis today on modules that provide better performance for customers and result in MPS achieving higher dollar-content per end device. Management consistently targets and achieves their growth goals, having quickly surpassed the prior $1 billion revenue target and more recently a $2 billion revenue run-rate, with eyes on a $4 billion business in the coming years and even larger beyond. As customers continue to turn to MPS for its culture of innovation and performance advantage relative to competitors, we believe the company will achieve its growth ambitions and become an increasingly important player in the power and analog semiconductor industry.”
An engineer examining a DC to DC integrated circuit board, looking for any flaws.
Monolithic Power Systems, Inc. (NASDAQ:MPWR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 47 hedge fund portfolios held Monolithic Power Systems, Inc. (NASDAQ:MPWR) at the end of the first quarter, which was 51 in the previous quarter. Monolithic Power Systems, Inc. (NASDAQ:MPWR) reported $637.6 million, in revenues in the first quarter, which was slightly higher than the Q4 2024 and 39.2% higher than Q1 2024. While we acknowledge the potential of Monolithic Power Systems, Inc. (NASDAQ:MPWR) 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 Monolithic Power Systems, Inc. (NASDAQ:MPWR) and shared the list of best performing stocks of the last 20 years according to Jim Carmer. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors. While we acknowledge the potential of MPWR as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
