Strong Earnings Results Lifted Karman Holdings (KRMN) in Q2

Baron Funds, an investment management company, released its “Baron Discovery Fund” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the second quarter, the fund was up 14.76% (Institutional Shares), outperforming the 11.97% return for the Russell 2000 Growth Index. The fund was up 7.68% year-to-date, well ahead of the Index’s -0.48% return.  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 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 13.64%, and its shares gained 43.80% of their value in the last three months. On July 29, 2025, Karman Holdings Inc. (NYSE:KRMN) stock closed at $51.41 per share with a market capitalization of $6.803 billion.

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

Shares of Karman Holdings Inc., a best-in-class supplier of defense systems, rose during the quarter after the company reported strong earnings results that exceeded investor expectations. The company is well positioned across nearly all of the fastest-growing areas within the upcoming $1 trillion-plus U.S. defense budget (including missile defense and hypersonic technology) and supports most of the leading space launch companies (with market leading rocket component technology). We believe Karman’s position should enable it to outpace overall defense budget growth and continue to earn exceptional margins.

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A satellite being released from a launch vehicle, heading into space.

Karman Holdings Inc. (NYSE:KRMN) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 32 hedge fund portfolios held Karman Holdings Inc. (NYSE:KRMN) at the end of the first quarter, which was 0 in the previous quarter. In the first quarter of 2025, Karman Holdings Inc. (NYSE:KRMN) reported record revenue of $100.1 million, reflecting a 20.6% year-over-year increase. 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 the list of stocks recently discussed by Jim Cramer. 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.