Core Insights - Baron Fifth Avenue Growth Fund gained 5.7% in Q3 2025, underperforming the Russell 1000 Growth Index (10.5%) and the S&P 500 Index (8.1%) [2] - Year-to-date, the Fund is up 14.4%, compared to 17.2% and 14.8% for its benchmarks [2] Top Contributors to Performance - NVIDIA Corporation's shares rose 18.1% due to its strong position in AI infrastructure, with a long-term total addressable market (TAM) expansion from $1 trillion to between $3 and $4 trillion [3] - Shopify Inc. saw a 28.6% increase in shares, driven by a 30% year-over-year revenue growth and a 29% increase in gross merchandise volume (GMV) [4][5] - Tesla, Inc. shares increased by 40.0%, supported by record delivery volumes, renewed investor confidence in leadership, and advancements in AI initiatives [6] Top Detractors from Performance - The Trade Desk's shares declined 31.9% due to in-line earnings and competitive pressures, particularly from Amazon's entry into the market [7] - Intuitive Surgical, Inc. shares fell 17.7% as system placements in the U.S. did not meet expectations, compounded by financial pressures on hospital customers [8] - MercadoLibre, Inc. shares decreased by 10.6% due to macroeconomic pressures in Argentina and increased competition from Amazon, despite strong quarterly results [9] Recent Activity - The Fund initiated a small investment in Figma and added to existing holdings in KKR, Alphabet, Taiwan Semiconductor, and CrowdStrike, funded by reducing positions in seven other holdings [10]

Core Insights - Baron Fifth Avenue Growth Fund gained 5.7% in Q3, underperforming the Russell 1000 Growth Index (10.5%) and S&P 500 Index (8.1) [3][4] - Year-to-date, the Fund is up 14.4%, lagging behind the Russell 1000 Growth Index (17.2%) and S&P 500 Index (14.8%) [3][4] - The Information Technology sector has been a significant driver of returns, representing 52.6% of the Russell 1000 Growth Index [5] Fund Performance - Q3 performance: Fund Retail Shares gained 5.78%, Institutional Shares gained 5.72% [4] - Year-to-date performance: Retail Shares up 14.29%, Institutional Shares up 14.35% [4] - 1-year performance: Institutional Shares up 27.76%, outperforming the Russell 1000 Growth Index (25.53%) [4] Sector Analysis - The IT sector has appreciated 186% since the start of 2023, significantly outperforming the Russell 1000 Growth Index [5] - The Fund's underweight in the "Magnificent Seven" tech stocks contributed to its relative underperformance [7] - Health Care overweight and underweight in IT negatively impacted the Fund's performance [7] Key Contributors and Detractors - Top contributors: NVIDIA (2.02%), Shopify (1.42%), Tesla (1.27%), Alphabet (1.22%) [16] - Top detractors: The Trade Desk (-0.85%), Intuitive Surgical (-0.59%), MercadoLibre (-0.55%) [20] Investment Strategy - The Fund's portfolio is constructed on a bottom-up basis, focusing on quality ideas and conviction [23] - As of September 30, 2025, the top 10 holdings represented 60.3% of the Fund's net assets [24] - Recent activity includes initiating a position in Figma and increasing stakes in KKR, Alphabet, Taiwan Semiconductor, and CrowdStrike [28] Market Trends - AI investments are accelerating, with significant commitments from companies like Oracle ($455 billion backlog) and NVIDIA ($100 billion investment in OpenAI) [6][12] - The market is currently characterized by cautious investor sentiment, contrasting with the "bubble thinking" seen in the late 1990s [13] - Valuations today are considered more rational compared to the dot-com era, with major tech companies trading at lower P/E ratios than during the previous bubble [13][14] Company Insights - NVIDIA is positioned as a leader in AI infrastructure, with a total addressable market expanding from $1 trillion to $3-4 trillion [16] - Shopify's growth is driven by a 30% year-over-year revenue increase and successful expansion into various channels [18] - Tesla's stock surged due to strong delivery volumes and advancements in AI initiatives [19] Future Outlook - The Fund remains optimistic about long-term prospects, particularly in AI and technology sectors [44] - The anticipated downward trend in interest rates may lead to increased capital inflows into the stock market [14]

Market Overview - U.S. equity markets continued to rise in Q3, with the Russell 1000 Growth Index increasing by 10.5% and achieving 24 new all-time highs [3] - The S&P 500 rose by 8.1%, the Nasdaq 100 advanced by 11.2%, and the Dow Jones Industrial Average increased by 5.2% [3] - The rally was largely driven by significant infrastructure investments in the AI sector, including a $90 billion plan announced by President Trump and various multi-billion dollar partnerships among major AI companies [3] Economic Impact - Deutsche Bank estimates that tech spending, primarily in AI, will contribute approximately 1-1.5 percentage points to U.S. GDP growth in 2025 [3] - The U.S. government has been running around $2 trillion in fiscal deficits for the first 11 months of FY-2025, which, along with easing monetary policy, has supported equity market performance [3][6] Monetary Policy - The Federal Reserve cut the Federal Funds rate by 25 basis points to a range of 4.00%-4.25% in mid-September, with a more accommodative policy outlook for the coming years [6] - The Fed's median projection for the fed funds rate in 2025 has decreased to 3.6% from 3.9% [6] Sector Performance - Ithaka's portfolio underperformed the Russell 1000 Growth Index by 940 basis points in Q3, with stock selection and sector allocation negatively impacting performance [8] - Positive relative returns were generated in the Financial Services sector, while Technology and Consumer Discretionary sectors were the largest sources of underperformance [9] Key Contributors and Detractors - Top contributors included NVIDIA (18.0% return impact), Robinhood Markets (52.9%), and Shopify (28.8%) [10] - Major detractors were ServiceNow (-10.5%), Chipotle Mexican Grill (-24.6%), and Intuitive Surgical (-17.7%) [10] AI Investment Landscape - The AI infrastructure buildout is projected to reach $400 billion to $600 billion in 2025, with U.S. hyperscalers expected to account for $300 billion to $350 billion of this total [18] - The current wave of AI-driven capital expenditures is compared to historical infrastructure projects, indicating a significant shift in technology investment [18] Future Outlook - The ongoing AI buildout may redefine human interaction across various sectors, with companies viewing this as a once-in-a-generation opportunity [18][21] - Early productivity gains from AI implementations have shown efficiency improvements of 20%-50% in key business operations [20]

Company Overview - Philippe Laffont founded Coatue Management in 1999, focusing on technology investments, and has grown the fund to over $35 billion in assets under management [1][7] - The hedge fund has recently shifted its investment strategy, selling its position in Super Micro Computer while increasing its stake in Intuitive Surgical [2][7] Intuitive Surgical Insights - Intuitive Surgical's stock has seen a decline this year, but Laffont believes in a potential rebound due to its strong market position and historical performance [3] - Since its IPO 25 years ago, Intuitive Surgical's shares have increased by 19,390%, driven by the success of its da Vinci robotic surgical system, which was the first to receive FDA clearance for minimally invasive surgeries [4] - Intuitive Surgical remains the largest player in the surgical robotics market, with 11,040 systems installed globally by the end of 2024 [5] - The da Vinci systems were utilized in 2.7 million procedures last year, showcasing their active use in hospitals [6] - Competing surgical systems generally target different procedures, giving Intuitive Surgical a significant advantage due to the high costs associated with installing and training for its systems [8]