Baron Capital, an investment management company, released its Q1 2026 investor letter for the “Baron Focused Growth Fund”. A copy of the letter can be downloaded here. The Baron Focused Growth Fund® (the Fund) experienced a challenging start to 2026, declining 4.99% (Institutional Shares) compared to a 3.52% drop in the Russell 2500 Growth Index (the Benchmark). Concerns regarding the influence of AI on the portfolio and the potential effects of the conflict in Iran on inflation, interest rates, and consumer spending have impacted the Fund’s performance this quarter. The Fund continues to focus on long-term investments in growth-oriented businesses with competitive advantages and manages a balanced portfolio of uncorrelated businesses to reduce risk and aim for strong excess returns. As of March 31, 2026, the top 10 holdings represented 58.4% of net assets. In addition, please check the Fund’s top five holdings to know its best picks in 2026.
In its first-quarter 2026 investor letter, Baron Focused Growth Fund highlighted stocks like FIGS, Inc. (NYSE:FIGS). FIGS, Inc. (NYSE:FIGS) is a direct-to-consumer healthcare apparel company known for its scrubwear for healthcare professionals. On April 24, 2026, FIGS, Inc. (NYSE:FIGS) closed at $16.51 per share. One-month return of FIGS, Inc. (NYSE:FIGS) was 14.65%, and its shares gained 314.82% over the past 52 weeks. FIGS, Inc. (NYSE:FIGS) has a market capitalization of $2.76 billion.
Baron Focused Growth Fund stated the following regarding FIGS, Inc. (NYSE:FIGS) in its Q1 2026 investor letter:
“FIGS, Inc. (NYSE:FIGS) designs and sells scrubwear for health care professionals through a digitally native, direct-to-consumer strategy. Shares rose following robust fourth-quarter results and upbeat 2026 guidance. Revenue expanded 33% to $201.9 million, reflecting broad-based momentum across categories and geographies and exceeding expectations. Holiday demand was strong throughout the season and remained elevated through quarter-end. U.S. revenue rose 28.7% to $164.2 million, while international revenue accelerated 55% to $37.7 million, with scrubs and non-scrubwear contributing gains of 35% and 26%, respectively. This topline strength translated to profitability, with EBITDA rising 29.8% to $26.7 million. Building on this momentum, revenue is expected to grow in the low-20% range in the first quarter and 10% to 12% for the full year. Additional drivers include accelerating international expansion, new store openings (both the ramping 2025 cohort and four locations planned for 2026), and continued traction in TEAMS (FIGS’ enterprise and group ordering business). The company maintains a strong balance sheet, with no debt and roughly $300 million in cash and marketable securities.”
FIGS, Inc. (NYSE:FIGS) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 33 hedge fund portfolios held FIGS, Inc. (NYSE:FIGS) at the end of the fourth quarter, up from 25 in the previous quarter. While we acknowledge the risk and potential of FIGS, Inc. (NYSE:FIGS) 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 FIGS, Inc. (NYSE:FIGS) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered FIGS, Inc. (NYSE:FIGS) and shared the list of best apparel stocks to buy in 2026. In addition, please check out our hedge fund investor letters Q1 2026 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.
