Baron Funds, an investment management company, released its “Baron Discovery Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. In the first quarter, the fund was down 6.17% (Institutional Shares), outperforming the -11.12% return for the Russell 2000 Growth Index. The market began strong in February but faded due to Trump’s serious tariff enactment, which the market perceives as inflationary and slowing economic growth. The decline accelerated after April 2nd, causing fears of a trade war and global recession. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its first-quarter 2025 investor letter, Baron Discovery Fund highlighted stocks such as Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS). Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) is a technology company, that offers mission-critical products, services, and solutions. The one-month return of Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) was 10.31%, and its shares gained 62.71% of their value over the last 52 weeks. On May 16, 2025, Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) stock closed at $35.21 per share with a market capitalization of $5.397 billion.
Baron Discovery Fund stated the following regarding Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) in its Q1 2025 investor letter:
“Shares of Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS), a disruptive defense technology provider, rose following a strong quarterly earnings report that demonstrated notable strength across multiple segments and guided to faster than baseline growth in fiscal 2026. We believe Kratos is increasingly well positioned to accelerate growth with its exposure to what are arguably the fastest growing segments of the defense ecosystem, including hypersonic missiles, solid rocket motors, and unmanned aircraft solutions. The company is hitting its stride and is making huge investments now to satisfy what it believes to be very visible future demand.”
A technician in a laboratory carrying out research and development of microwave electronics.
Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 21 hedge fund portfolios held Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) at the end of the fourth quarter, compared to 20 in the third quarter. Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) reported revenues of $302.6 million, surpassing its guidance range. While we acknowledge the potential of Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.
In another article, we covered Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) and shared the list of best military drone stocks to buy. In addition, please check out our hedge fund investor letters Q1 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.
