Baron Funds, an investment management company, released its “Baron Discovery Fund” fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. The Fund focuses on long-term, competitively positioned companies that are well-managed and have significant potential in untapped markets. The letter also addressed the advancements in AI and how humans define themselves in the changing landscape. In Q4, the fund generated a return of 0.19% (Institutional Shares), underperforming the Russell 2000 Growth Index by 1.03 percentage points. Over the entire year, the fund posted a return of 10.96%, while the Index returned 13.01%. The outperformance of low-quality and short-term price momentum-oriented stocks affected the Fund’s focus on long-term valuation metrics. The top 10 holdings comprised 26.7% of the Fund’s net assets, with cash making up 3.3%. The Fund maintains strong optimism and expects a high-growth, low-inflation environment in 2026. Please review the Fund’s top five holdings to gain insights into their key selections for 2025.
In its fourth-quarter 2025 investor letter, Baron Discovery Fund highlighted stocks like Primo Brands Corporation (NYSE:PRMB). Primo Brands Corporation (NYSE:PRMB) is a North American beverage company and a leading detractor from the fund’s performance during the quarter. On February 3, 2026, Primo Brands Corporation (NYSE:PRMB) stock closed at $18.96 per share. Primo Brands Corporation (NYSE:PRMB) delivered a 10.75% return in the past month, and its shares lost 43.44% of their value over the past twelve months. Primo Brands Corporation (NYSE:PRMB) has a market capitalization of $7.021 billion.
Baron Discovery Fund stated the following regarding Primo Brands Corporation (NYSE:PRMB) in its fourth quarter 2025 investor letter:
“Primo Brands Corporation (NYSE:PRMB) was a detractor during the period following an earnings release that showed a decline in the company’s home and office water delivery business. As part of the merger between Blue Triton and Primo Water, management identified opportunities to save costs through elimination of redundant manufacturing plants and distribution branches. Execution of this plan during the first half of 2025 led to unexpected service disruptions in the home and office delivery segment. The problems were caused by changes to 5-gallon jug availability and adoption of new technology systems used by drivers to manage their deliveries. These issues negatively impacted the logistics of highly calibrated routes and led to a temporary reduction in on-time, in-full delivery rates. The third quarter results were a continuation of these issues, however, the magnitude of service disruption and related impact on revenues was greater than expected. We expect the business to return to its normal rate of growth in the coming quarters and believe the stock will command a materially higher valuation once the current challenges are in the rear view.”
Primo Brands Corporation (NYSE:PRMB) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 62 hedge fund portfolios held Primo Brands Corporation (NYSE:PRMB) at the end of the third quarter, compared to 72 in the previous quarter. While we acknowledge the risk and potential of Primo Brands Corporation (NYSE:PRMB) 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 Primo Brands Corporation (NYSE:PRMB) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Primo Brands Corporation (NYSE:PRMB) and shared a list of high growth food stocks to buy. In addition, please check out our hedge fund investor letters Q4 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.
