Baron Funds, an investment management company, released its “Baron Fifth Avenue Growth Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. The fund declined 13.4% (Institutional Shares) in the first quarter compared to a 10.0% decline for the Russell 1000 Growth Index and a 4.3% decrease for the S&P 500 Index. The Fund focuses on investing in Big Ideas, which often trade and can be considered long-duration assets. As a result, the portfolio frequently experiences significant stock price fluctuations, particularly in the short term and during periods of extreme market volatility, while the intrinsic values of businesses remain much more stable. Nevertheless, Q1 was a challenging first quarter. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.
In its first-quarter 2025 investor letter, Baron Fifth Avenue Growth Fund highlighted stocks such as Datadog, Inc. (NASDAQ:DDOG). Datadog, Inc. (NASDAQ:DDOG) is an observability and security platform for cloud applications. The one-month return of Datadog, Inc. (NASDAQ:DDOG) was 11.39%, and its shares gained 7.60% of their value over the last 52 weeks. On June 20, 2025, Datadog, Inc. (NASDAQ:DDOG) stock closed at $127.50 per share, with a market capitalization of $44.033 billion.
Baron Fifth Avenue Growth Fund stated the following regarding Datadog, Inc. (NASDAQ:DDOG) in its Q1 2025 investor letter:
“Most of our companies do not sell goods but instead provide critical services to their customers.Datadog, Inc. (NASDAQ:DDOG), the leading cloud-based observability platform, has seen its stock decline by over 30% year-to-date because its revenues are based on consumption/usage and would likely be impacted by any significant cyclical downturn. However, its competitive position has gotten stronger, its market share is continuing to rise, and it is indexed to promising long-term secular trends of cloud adoption and accelerating app development, and is well positioned for AI as the critical central IT infrastructure platform for its customers.”
A close-up of a laptop with a software engineer coding on the monitor.
Datadog, Inc. (NASDAQ:DDOG) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 84 hedge fund portfolios held Datadog, Inc. (NASDAQ:DDOG) at the end of the first quarter, which was 83 in the previous quarter. Datadog, Inc. (NASDAQ:DDOG) reported revenue of $762 million in the first quarter of 2025, marking an increase of 25% year-over-year. While we acknowledge the potential of Datadog, Inc. (NASDAQ:DDOG) 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 Datadog, Inc. (NASDAQ:DDOG) and shared the list of AI stocks every investor should be watching. Datadog, Inc. (NASDAQ:DDOG) detracted from Janus Henderson Forty Fund’s performance in Q1 2025. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors. While we acknowledge the potential of DDOG as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
