Baron Capital, an investment management company, released its Q1 2026 investor letter for the “Baron Growth Fund”. A copy of the letter is available to download here. The Fund declined 12.06% in the quarter compared to the Fund’s benchmark, the Russell 2000 Growth Index’s -2.81% return. The Russell 3000 Index, which measures the performance of the broad U.S. equity market, declined 3.96% for the quarter. Concerns about AI’s impact on the portfolio affected the Fund’s performance this quarter. Initial declines in the software and information services sectors extended to various industries throughout the period. However, the Fund remains confident in its high-quality portfolio, which is poised to deliver attractive and steady earnings growth. There is minimal evidence suggesting that AI has negatively impacted the fundamentals of the companies the Fund has invested in. As of March 31, 2026, the portfolio consisted of 17 investments, with the top 10 holdings accounting for 96.4% of the Fund’s 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 Growth Fund highlighted Arch Capital Group Ltd. (NASDAQ:ACGL) as a notable contributor. Arch Capital Group Ltd. (NASDAQ:ACGL) is an insurance company that provides insurance, reinsurance, and mortgage insurance products. On May 6, 2026, Arch Capital Group Ltd. (NASDAQ:ACGL) closed at $94.70 per share. One-month return of Arch Capital Group Ltd. (NASDAQ:ACGL) was -4.19%, and its shares gained 0.15% over the past 52 weeks. Arch Capital Group Ltd. (NASDAQ:ACGL) has a market capitalization of $33.09 billion.
Baron Growth Fund stated the following regarding Arch Capital Group Ltd. (NASDAQ:ACGL) in its Q1 2026 investor letter:
“Specialty insurer Arch Capital Group Ltd. (NASDAQ:ACGL) contributed to performance as property and casualty (P&C) insurance stocks broadly outpaced the market amid heightened volatility. P&C insurance stocks tend to be resilient during turbulent markets and are less exposed to the AI-related concerns weighing on other sectors. In addition, Arch reported better-than-expected quarterly earnings, and management expects a continuation of double-digit growth in book value per share. We continue to own the stock due to Arch’s strong management team and our expectation of continued growth in earnings and book value over time.”
Arch Capital Group Ltd. (NASDAQ:ACGL) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 51 hedge fund portfolios held Arch Capital Group Ltd. (NASDAQ:ACGL) at the end of the fourth quarter, up from 40 in the previous quarter. While we acknowledge the risk and potential of Arch Capital Group Ltd. (NASDAQ:ACGL) 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 Arch Capital Group Ltd. (NASDAQ:ACGL) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Arch Capital Group Ltd. (NASDAQ:ACGL) and shared the list of dirt-cheap stocks to buy. 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.
