Baron Fund, an investment management company, released its Q4 2025 letter for “Baron Small Cap Fund”. A copy of the letter can be downloaded here. The market extended its positive trends in the fourth quarter. The Baron Small Cap Fund was down 1.56% in the quarter compared to 1.22% gain for the Russell 2000 Growth Index. The fund returned (0.66)% in 2025, trailing the index by 13.67 percentage points. The yearly performance was weak both on an absolute and a relative basis. Large-cap growth stocks led the market for the third consecutive year, with concentrated leadership. Heading into 2026, the firm expects better growth ahead for small caps given the solid setup. Please review the Strategy’s top five holdings to gain insights into their key selections for 2025.
In its fourth-quarter 2025 investor letter, Baron Small Cap Fund highlighted Oddity Tech Ltd. (NASDAQ:ODD) as one of its leading detractors. Oddity Tech Ltd. (NASDAQ:ODD), a consumer tech company, builds a digital-first brand for the beauty and wellness market. On February 6, 2026, Oddity Tech Ltd. (NASDAQ:ODD) stock closed at $30.07 per share. One-month return of Oddity Tech Ltd. (NASDAQ:ODD) was -14.31%, and its shares are down 28.64% over the past twelve months. Oddity Tech Ltd. (NASDAQ:ODD) has a market capitalization of about $1.73 billion.
Baron Small Cap Fund stated the following regarding Oddity Tech Ltd. (NASDAQ:ODD) in its fourth quarter 2025 investor letter:
“Oddity Tech Ltd. (NASDAQ:ODD) intends to transform the beauty and wellness market by using proprietary technology to sell and launch products exclusively online. Shares declined amid investor concerns around category weakness following cautious commentary from industry peers, as well as credit card data indicating a potential deceleration at the company’s largest brand, Il Makiage. ODDITY is also launching its third platform, MethodIQ, which requires incremental upfront marketing investment during the year, and yet unproven, adds a layer of uncertainty to the financials. Since its IPO, ODDITY’s results have been stellar, demonstrating an ability to create innovative products and successfully launch new brands by leveraging its molecule formulation and marketing capabilities. We continue to own the stock given its attractive valuation relative to future earnings, strong cash flow generation, solid balance sheet, and long-term growth opportunity in a large, underpenetrated e-commerce category.”
Oddity Tech Ltd. (NASDAQ:ODD) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 31 hedge fund portfolios held Oddity Tech Ltd. (NASDAQ:ODD) at the end of the third quarter, compared to 36 in the previous quarter. While we acknowledge the potential of Oddity Tech Ltd. (NASDAQ:ODD) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.