Baron Funds, an investment management company, released its “Baron Discovery Fund” fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. The Fund focuses on long-term, competitively positioned companies that are well-managed and have significant potential in untapped markets. The letter also addressed the advancements in AI and how humans define themselves in the changing landscape. In Q4, the fund generated a return of 0.19% (Institutional Shares), underperforming the Russell 2000 Growth Index by 1.03 percentage points. Over the entire year, the fund posted a return of 10.96%, while the Index returned 13.01%. The outperformance of low-quality and short-term price momentum-oriented stocks affected the Fund’s focus on long-term valuation metrics. The top 10 holdings comprised 26.7% of the Fund’s net assets, with cash making up 3.3%. The Fund maintains strong optimism and expects a high-growth, low-inflation environment in 2026. Please review the Fund’s top five holdings to gain insights into their key selections for 2025.
In its fourth-quarter 2025 investor letter, Baron Discovery Fund highlighted JFrog Ltd. (NASDAQ:FROG) as a new addition. Incorporated in 2008, JFrog Ltd. (NASDAQ:FROG) is a technology company that provides a software supply chain platform. The one-month return of JFrog Ltd. (NASDAQ:FROG) was -6.18%, and its shares gained 52.78% of their value over the last 52 weeks. On February 2, 2026, JFrog Ltd. (NASDAQ:FROG) stock closed at $55.52 per share, with a market capitalization of $6.569 billion.
Baron Discovery Fund stated the following regarding JFrog Ltd. (NASDAQ:FROG) in its fourth quarter 2025 investor letter:
“We established a position in JFrog Ltd. (NASDAQ:FROG), a leading provider of software supply chain management tools that enable developers to securely build, manage, and release modern applications. The company’s core offering, Artifactory, serves as a universal hub for “binaries” which is the ones and zeros language that computers speak (and use to run applications), after converted (compiled) from human facing programming languages such as Python, JavaScript, C#, and many others. As organizations develop more complex applications that are increasingly dependent on open source libraries (pre-fabricated chunks of code that can be shared among users around the world), the management of these binaries has become a critical operational requirement. JFrog addresses this challenge with a centralized solution that stores, tracks, and secures software binaries, facilitating faster development cycles and consistent deployments. The platform also extends into security with modules like JFrog Xray and Advanced Security, which continuously scan binaries to ensure only compliant, vulnerability-free software reaches production.
JFrog is widely recognized as the industry standard for binary management, serving a customer base of over 7,000 organizations. This includes 83% of the Fortune 100, the top 10 global technology firms, the 10 largest financial institutions, and 9 of the top 10 health care organizations. The company is gaining market share from smaller competitors in the binary category due to its breadth and depth of coverage—Artifactory supports over 30 different code package formats and programming languages (far more than competitors) while offering more efficient storage, deeper security context, and tighter integrations with other developer tools. By streamlining workflows and mitigating security risks, JFrog delivers high return on investment, reflected in its impressive 97% customer gross retention rate and healthy 118% net expansion rate…” (Click here to read the full text)
JFrog Ltd. (NASDAQ:FROG) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 52 hedge fund portfolios held JFrog Ltd. (NASDAQ:FROG) at the end of the third quarter, up from 46 in the previous quarter. While we acknowledge the risk and potential of JFrog Ltd. (NASDAQ:FROG) 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 JFrog Ltd. (NASDAQ:FROG) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered JFrog Ltd. (NASDAQ:FROG) and shared a list of stock outperforming market expectations. In addition, please check out our hedge fund investor letters Q4 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.
