Here's Why Baron Small Cap Fund Exited Its Position in Ibotta (IBTA)
Baron Funds, an investment management company, released its 'Baron Small Cap Fund' first-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the first quarter of 2025, the fund was down 9.07% (Institutional Shares) compared to the Russell 2000 Growth Index's (the Index) -11.12% return. Small-cap stocks continued to underperform larger market caps meaningfully, so the Fund lagged the Russell 3000 Index, which fell 4.72% in the quarter. In addition, please check the fund's top five holdings to know its best picks in 2025.
In its first-quarter 2025 investor letter, Baron Small Cap Fund highlighted stocks such as Ibotta, Inc. (NYSE:IBTA). Ibotta, Inc. (NYSE:IBTA) is a technology company that enables consumer packaged goods brands to deliver digital promotions to consumers through the Ibotta Performance Network (IPN). The one-month return of Ibotta, Inc. (NYSE:IBTA) was -4.23%, and its shares lost 51.73% of their value over the last three months. On May 23, 2025, Ibotta, Inc. (NYSE:IBTA) stock closed at $50.95 per share with a market capitalization of $1.29 billion.
Baron Small Cap Fund stated the following regarding Ibotta, Inc. (NYSE:IBTA) in its Q1 2025 investor letter:
"Ibotta, Inc. (NYSE:IBTA) has struggled as a public company with sales growth and earnings lower than expected. Their solution and brand engagement needs tweaking, which will take some time, so we decided to step to the sidelines during this transition."
Copyright: rawpixel / 123RF Stock Photo
Ibotta, Inc. (NYSE:IBTA) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 8 hedge fund portfolios held Ibotta, Inc. (NYSE:IBTA) at the end of the first quarter, which was 15 in the previous quarter. In the first quarter of 2025, Ibotta, Inc. (NYSE:IBTA) reported revenue of $84.6 million, representing growth of 3% year-over-year. While we acknowledge the potential of Ibotta, Inc. (NYSE:IBTA) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.
In another article, we covered Ibotta, Inc. (NYSE:IBTA) and shared the list of worst performing software stocks to buy according to analysts. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors.
READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.
Disclosure: None. This article is originally published at Insider Monkey.
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