Baron Funds, an investment management company, released its “Baron Asset Fund” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. U.S. stocks rose amid volatility caused by tariff policies and Middle East tensions. Early April risk-off sentiment was fueled by Trump’s “Liberation Day” tariffs, seen as more severe than expected. U.S. equities rose after April 8, driven by favorable trade news, strong earnings, dovish Fed signals, and AI momentum, reaching record highs by quarter’s end. During the second quarter, the fund was up 7.85% (Institutional Shares) compared to an 18.20% gain for the Russell Midcap Growth 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 Asset Fund highlighted stocks such as LPL Financial Holdings Inc. (NASDAQ:LPLA). Based in San Diego, California, LPL Financial Holdings Inc. (NASDAQ:LPLA) offers an integrated platform of brokerage and investment advisory services. The one-month return of LPL Financial Holdings Inc. (NASDAQ:LPLA) was 3.03%, and its shares gained 99.81% of their value over the last 52 weeks. On July 31, 2025, LPL Financial Holdings Inc. (NASDAQ:LPLA) stock closed at $395.73 per share, with a market capitalization of $31.649 billion.
Baron Asset Fund stated the following regarding LPL Financial Holdings Inc. (NASDAQ:LPLA) in its second quarter 2025 investor letter:
“The Fund established a position in LPL Financial Holdings Inc. (NASDAQ:LPLA), the largest independent broker-dealer (IBD) in the U.S. LPL uses technology to help independent financial advisors run their practices more efficiently and service their clients more successfully. LPL should continue to benefit from secular growth in the demand for financial advice, and a shift among financial advisors away from large wire houses towards independent practices. We believe LPL, as the largest IBD, is well placed to continue gaining market share, as it offers its advisors high-quality technology, a range of affiliation models, and best-in-class financial incentives.
LPL invests more than its competitors in developing the technologies that allow advisors to run their practice smoothly. The company has also developed a range of possible outsourcing relationships for advisors to choose among, allowing a high degree of flexibility as they transition their practices to independence. LPL’s scale allows it to spread their costs over a $1.5 trillion-plus asset base. LPL then uses its superior scale to pay industry-leading economics to its advisors, who can earn payouts of over 90% of the revenue they generate. The combination of these benefits enables LPL to continue recruiting more assets onto its platform, which in turn reinforces these scale advantages. LPL also benefits from the long-term trend of rising asset prices, which grows its base of assets under management.
We believe that LPL is well positioned to continue winning new advisors and asset inflows. As it leverages its scale to continue developing its advisor offerings, LPL is gaining share in a growing market. With low teens asset growth and ongoing margin expansion, we believe that LPL can grow EBITDA at a mid-teens rate, and coupled with share repurchases, compound earnings per share at a high teens rate for an extended period.”
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LPL Financial Holdings Inc. (NASDAQ:LPLA) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 63 hedge fund portfolios held LPL Financial Holdings Inc. (NASDAQ:LPLA) at the end of the first quarter, which was 65 in the previous quarter. While we acknowledge the risk and potential of LPL Financial Holdings Inc. (NASDAQ:LPLA) 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 LPL FINANCIAL HOLDINGS INC. (NASDAQ:LPLA) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered LPL Financial Holdings Inc. (NASDAQ:LPLA) and shared Carillon Eagle Small Cap Growth Fund’s views on the company in the previous quarter. 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.
