Baron Capital, an investment management company, released its Q1 2026 investor letter for the “Baron Focused Growth Fund”. A copy of the letter can be downloaded here. The Baron Focused Growth Fund® (the Fund) experienced a challenging start to 2026, declining 4.99% (Institutional Shares) compared to a 3.52% drop in the Russell 2500 Growth Index (the Benchmark). Concerns regarding the influence of AI on the portfolio and the potential effects of the conflict in Iran on inflation, interest rates, and consumer spending have impacted the Fund’s performance this quarter. The Fund continues to focus on long-term investments in growth-oriented businesses with competitive advantages and manages a balanced portfolio of uncorrelated businesses to reduce risk and aim for strong excess returns. As of March 31, 2026, the top 10 holdings represented 58.4% of 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 Focused Growth Fund highlighted stocks like Red Rock Resorts, Inc. (NASDAQ:RRR). Headquartered in Las Vegas, Nevada, Red Rock Resorts, Inc. (NASDAQ:RRR) develops and operates casino and entertainment properties. One-month return of Red Rock Resorts, Inc. (NASDAQ:RRR) was 3.62%, and its shares gained 26.18% of their value over the last 52 weeks. On April 24, 2026, Red Rock Resorts, Inc. (NASDAQ:RRR) stock closed at $54.08 per share, with a market capitalization of $3.16 billion.
Baron Focused Growth Fund stated the following regarding Red Rock Resorts, Inc. (NASDAQ:RRR) in its Q1 2026 investor letter:
“Further losses were seen in our exposure to consumer-focused investments given worries about the escalation of the war in Iran and what that could mean for inflation, interest rates, and consumer spending. These included companies such as Red Rock Resorts, Inc. (NASDAQ:RRR), Hyatt Hotels Corporation, and On Holding AG. However, despite worries about the war and its impact on the consumer, these companies continue to do quite well generating strong revenue growth with significant pricing power as the consumer continues to spend despite macro uncertainty.
Shares of Las Vegas Locals casino operator, Red Rock Resorts, declined 12.0% in the first quarter and hurt performance by 40 bps as investors were concerned with a potential slowdown in Las Vegas gaming revenue brought about by the macro uncertainty from the war in Iran. Combine this slowdown with construction disruption due to many renovation and expansion projects occurring at its properties and current earnings could decelerate. However, the company continues to invest in its resorts as management sees further opportunities for growth from continued population growth and a higher net worth individual coming to Las Vegas. The company continues to generate strong cash flow that should produce accelerated growth in the coming years. We continue to believe the stock remains attractively valued as the company’s founders recently bought stock at current levels, giving us further confidence in the company’s accelerated growth prospects.”
