Baron Fund, an investment management company, recently released its Q4 2025 letter for the Baron Partners Fund. The Fund had a remarkable fourth quarter, with a return of 19.07% for Institutional Shares. This performance outpaced both the Russell Midcap Growth Index, which returned -3.70%, and the broader Russell 3000 Index, which returned 2.40% during the same period. For the entire calendar year, the Fund delivered a return of 24.86%, significantly outperforming the Russell Midcap Growth Index and the Russell 3000 Index.
The investment strategy of the Baron Partners Fund focuses on long-term investments in a non-diversified portfolio of well-managed growth businesses at attractive prices across market caps. The Fund has a track record of strong absolute and relative performance over the long term, with substantial appreciation during favorable market conditions and value preservation during challenging periods.
In the Q4 2025 investor letter, Tesla, Inc. (NASDAQ:TSLA) was highlighted as a key holding of the Baron Partners Fund. Tesla is an American company known for manufacturing electric vehicles and energy generation and storage systems. As of February 10, 2026, Tesla’s stock closed at $425.21 per share, with a one-month return of -3.19% and a 26.36% increase over the past twelve months. The company boasts a market capitalization of $1.596 trillion.
Regarding Tesla’s position in the Fund, Baron Partners Fund disclosed that they had exited 30.5% of their stake in Tesla in 2025. Despite the reduction in holdings, the Fund remains extremely confident in Tesla’s prospects and its potential to become a more valuable business in the future. The initial purchase of Tesla shares was made in 2016, with an average cost of $14.22 per share. The significant appreciation in Tesla’s stock led to an increase in the position’s weight in the portfolio, prompting the Fund to engage in a redemption in-kind agreement with a large investment bank to dispose of a portion of the holdings. This decision was driven by portfolio construction considerations and not a lack of confidence in Tesla as a business.
Tesla, Inc. (NASDAQ:TSLA) holds the 23rd position on the list of 30 Most Popular Stocks Among Hedge Funds. Despite the company’s potential as an investment, some AI stocks are believed to offer greater upside potential with lower downside risk. Investors interested in undervalued AI stocks can explore opportunities in the market.
For more insights on Tesla, Inc. (NASDAQ:TSLA) and other investment opportunities, readers can refer to additional articles covering the company’s performance and perspectives from leading investors. The Baron Partners Fund’s decision to trim its position in Tesla reflects a strategic move within its portfolio management approach.
Disclosure: This article was originally published on Insider Monkey and does not contain any specific recommendations for investment decisions. Readers are encouraged to conduct their research and consult with financial advisors before making investment choices.
