Karman Holdings (KRMN) is Benefiting From Increased Defense Spending

Baron Funds, an investment management company, released its “Baron Discovery Fund” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. Year-to-date, the fund was up 10.75% (Institutional Shares), compared to a 11.65% return for the Russell 2000 Growth Index. The fund was up 2.85% in the third quarter, lagging behind the Index’s 12.19% return.  In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its third-quarter 2025 investor letter, Baron Discovery Fund highlighted stocks such as Karman Holdings Inc. (NYSE:KRMN). Karman Holdings Inc. (NYSE:KRMN) engages in designing, testing, manufacturing, and sale of mission-critical systems. The one-month return of Karman Holdings Inc. (NYSE:KRMN) was 16.86%, and its shares gained 65.94% of their value over the last three months. On October 29, 2025, Karman Holdings Inc. (NYSE:KRMN) stock closed at $85.79 per share, with a market capitalization of $11.352 billion.

Baron Discovery Fund stated the following regarding Karman Holdings Inc. (NYSE:KRMN) in its third quarter 2025 investor letter:

“Shares of Karman Holdings Inc. (NYSE:KRMN), a best-in-class supplier of defense systems, rose during the quarter as the company continued to benefit from a generational increase in defense spending. Demand was especially strong across the nation’s flagship defense programs, where Karman is a mission-critical supplier of components and solutions, as well as in emerging segments such as hypersonics, where the company is a leading player. Karman is arguably one of the most important suppliers in the defense industry, given its focus on technically complex systems for a customer base composed largely of prime contractors, enabling margins more than double the peer average. We continue to expect elevated growth and incremental margin expansion as the company solidifies its irreplaceable position in the defense supply chain.”

Karman Holdings Inc. (NYSE:KRMN) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 21 hedge fund portfolios held Karman Holdings Inc. (NYSE:KRMN) at the end of the second quarter, which was 32 in the previous quarter. While we acknowledge the risk and potential of Karman Holdings Inc. (NYSE:KRMN) 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 Karman Holdings Inc. (NYSE:KRMN) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered Karman Holdings Inc. (NYSE:KRMN) and shared Prosper Stars & Stripes’ views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q3 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.