Baron Capital, an investment management company, released its Q4 2025 letter for its “Baron Real Estate Fund”. A copy of the letter is available to download here. Baron Real Estate Fund was recognized as the Best Real Estate Fund Over Three Years at the 2026 LSEG Lipper Funds Awards, reflecting the three-year performance ending December 31, 2025. The Fund declined 5.39% (Institutional Shares) in Q1, underperforming the MSCI USA IMI Extended Real Estate Index (−0.96%) and the MSCI US REIT Index (+4.52%). Despite the Q1 decline, the long-term performance remains strong. The letter covers current thoughts, portfolio composition, key themes, top contributors and detractors, recent activity, and outlook for real estate and the Fund. The Fund has a positive outlook on the broader equity market and public real estate, and maintains a constructive outlook with compelling reasons to stay the course. Please review the Fund’s top five holdings to gain insights into their key selections for 2026.
In its first-quarter 2026 investor letter, Baron Real Estate Fund Strategy highlighted stocks like CBRE Group, Inc. (NYSE:CBRE). CBRE Group, Inc. (NYSE:CBRE) is a commercial real estate services and investment company. On June 11, 2026, CBRE Group, Inc. (NYSE:CBRE) closed at $131.91 per share. One-month return of CBRE Group, Inc. (NYSE:CBRE) was 2.93%, and its shares gained 0.59% over the past 52 weeks. CBRE Group, Inc. (NYSE:CBRE) has a market capitalization of $38.63 billion.
Baron Real Estate Fund stated the following regarding CBRE Group, Inc. (NYSE:CBRE) in its Q1 2026 investor letter:
“CBRE Group, Inc. (NYSE:CBRE) and Jones Lang LaSalle Incorporated, two leading commercial real estate services firms, were detractors in the first quarter. Business fundamentals remain strong, with broad-based momentum across segments and management teams expressing healthy outlooks. The share price declines — roughly 20% over two days — were driven by an abrupt shift in investor sentiment around AI and its potential impact on certain business lines, not by any deterioration in fundamentals.
We take the AI question seriously. The technology is advancing rapidly, and its long-term implications are not yet fully knowable. That said, we believe CBRE and JLL are among the companies best positioned to navigate this transition — not despite AI, but because of it. Both have been early adopters, deploying AI to sharpen their competitive advantages and accelerate market share gains. We consider them AI winners, not AI casualties.
The structural investment case remains intact: commercial real estate outsourcing continues to grow, institutional ownership of the asset class is expanding, and both companies are gaining share in a highly fragmented market. We believe we are in the early stages of a recovery in commercial real estate sales and leasing activity. Against that backdrop, we see a credible path to mid-to-high-teens annual earnings per share growth over the next few years — and following the recent pullback, we find valuations undemanding.”
CBRE Group, Inc. (NYSE:CBRE) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 82 hedge fund portfolios held CBRE Group, Inc. (NYSE:CBRE) at the end of the first quarter, up from 79 in the previous quarter. While we acknowledge the risk and potential of CBRE Group, Inc. (NYSE:CBRE) 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 CBRE GROUP, INC. (NYSE:CBRE) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered CBRE Group, Inc. (NYSE:CBRE) and shared the list of most undervalued large cap stocks to buy according to analysts. 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.
