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Baron Capital, an investment management company, released its Q1 2026 investor letter for the “Baron Discovery Fund”. A copy of the letter can be downloaded here. It was a difficult quarter for Baron Discovery Fund, both on an absolute and relative basis. The Fund declined 10.65% (Institutional Shares) in the quarter, compared to the Russell 2000 Growth Index’s return of -2.81%. The underperformance of 7.88% was primarily attributed to sectors such as Information Technology, Consumer Discretionary, Health Care, and Industrials, along with a lack of exposure to Energy. The Fund sees the current SaaS-pocalypse as an opportunity to invest in compelling prospects among software companies that possess robust and sustainable competitive advantages. 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 Discovery Fund highlighted stocks like Intapp, Inc. (NASDAQ:INTA). Intapp, Inc. (NASDAQ:INTA) is a leading software company that provides AI-powered solutions for professional and financial firms. On May 6, 2026, Intapp, Inc. (NASDAQ:INTA) closed at $23.07 per share. One-month return of Intapp, Inc. (NASDAQ:INTA) was 8.46%, and its shares lost 57.67% over the past 52 weeks. Intapp, Inc. (NASDAQ:INTA) has a market capitalization of $1.8 billion.
Baron Discovery Fund stated the following regarding Intapp, Inc. (NASDAQ:INTA) in its Q1 2026 investor letter:
"Intapp, Inc. (NASDAQ:INTA), a vertical software platform serving private equity, legal, and consulting firms, detracted from performance this quarter. The drawdown was driven by a sector-wide AI disruption narrative that hit legal-adjacent software stocks particularly hard, with Intapp declining sharply through mid-February after Anthropic announced new legal tools. We sold our investment in the quarter as we believe that our other software holdings have better overall competitive advantages."
Intapp, Inc. (NASDAQ:INTA) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 25 hedge fund portfolios held Intapp, Inc. (NASDAQ:INTA) at the end of the fourth quarter, compared to 30 in the previous quarter. While we acknowledge the potential of Intapp, Inc. (NASDAQ:INTA) 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.
In another article, we covered Intapp, Inc. (NASDAQ:INTA) and shared the list of oversold tech stocks to buy according to analysts. In addition, please check out our hedge fund investor letters Q1 2026 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.