Baron Capital, an investment management company, released its Q2 2026 letter for "Baron Partners Fund". A copy of the letter can be downloaded here. Baron Partners Fund reported a 16.61% (Institutional Shares) gain in Q2, outperforming both the Russell Midcap Growth Index (14.55%) and the Russell 3000 Index (15.44%).
Year-to-date, it has returned 10.40%, exceeding the Russell Midcap Growth Index's 7.27%. Its one-year return is at 48.75%, significantly ahead of the Index (6.17%) and the Market Index (22.82%). The Fund has consistently outperformed the Index in 4 out of the last 5 years.
With a focus on a concentrated portfolio, the Fund invests in 28 companies, primarily in the top 10 positions, which account for 74.1% of total investments. The median market capitalization of these companies is $20.9 billion. The strategy focuses on growth businesses expected to double in value within 5-6 years, utilizing proprietary research to ensure competitive advantages and sustainable growth opportunities, while employing leverage for enhanced returns and increased volatility.
Additionally, reviewing the Fund's top five holdings could help identify its best picks for 2026. In its Q2 2026 investor letter, Baron Partners Fund highlighted Morningstar, Inc. (NASDAQ:MORN), a U.S.-based financial services company providing investment research, ratings, and data platforms. Morningstar, Inc. (NASDAQ:MORN) declined 9.79% during the quarter, contributing 0.17% to the portfolio's overall drop.
On August 14, 2026, Morningstar, Inc. (NASDAQ:MORN) closed at $207.41 per share, reflecting a market capitalization of $7.78 billion. Morningstar, Inc. (NASDAQ:MORN) posted a one‑month return of 20.76%, while its shares lost 19.78% over the past 52 weeks." Baron Partners Fund stated the following regarding Morningstar, Inc. (NASDAQ:MORN) in its Q2 2026 investor letter: "Morningstar, Inc. (NASDAQ:MORN) is a leading provider of independent investment research, data, and analytics serving financial advisors, asset managers, and individual investors globally. The shares declined 9.79% in the quarter amid continued investor concerns that generative AI could disrupt the company's data and research businesses.
Those concerns compressed valuation multiples across information services companies and weighed on the stock, even as Morningstar's core franchises continued to post healthy results. Organic revenue grew 8% and adjusted EBIT grew 18% over the last 12 months. We continue to view Morningstar as a collection of high-quality, hard-to-replicate data businesses.
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