Arch Capital Group Ltd (ACGL) Gave Back Some of Its Gains in Q2

Baron Funds, an investment management company, released its “Baron Asset Fund” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. U.S. stocks rose amid volatility caused by tariff policies and Middle East tensions. Early April risk-off sentiment was fueled by Trump’s “Liberation Day" tariffs, seen as more severe than expected. U.S. equities rose after April 8, driven by favorable trade news, strong earnings, dovish Fed signals, and AI momentum, reaching record highs by quarter’s end. During the second quarter, the fund was up 7.85% (Institutional Shares) compared to an 18.20% gain for the Russell Midcap Growth Index. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its second-quarter 2025 investor letter, Baron Asset Fund highlighted stocks such as Arch Capital Group Ltd. (NASDAQ:ACGL). Arch Capital Group Ltd. (NASDAQ:ACGL) is an insurance company that offers insurance, reinsurance, and mortgage insurance products. The one-month return of Arch Capital Group Ltd. (NASDAQ:ACGL) was -3.51%, and its shares lost 12.78% of their value over the last 52 weeks. On July 31, 2025, Arch Capital Group Ltd. (NASDAQ:ACGL) stock closed at $86.06 per share, with a market capitalization of $32.307 billion.

Baron Asset Fund stated the following regarding Arch Capital Group Ltd. (NASDAQ:ACGL) in its second quarter 2025 investor letter:

"Specialty insurer Arch Capital Group Ltd. (NASDAQ:ACGL) gave back some of its gains from earlier in the year, following slower growth and broader weakness across insurance stocks during the second quarter. In the company’s first quarter, premium growth fell below Wall Street forecasts and slowed relative to the prior quarter because of rising competition and lower pricing in certain business lines. Even so, earnings exceeded expectations because of stronger underwriting margins and a lower corporate tax rate. We continue to hold shares because of Arch’s strong management team and our expectation for significant growth in earnings and book value per share over time."

Arch Capital Group Ltd. (NASDAQ:ACGL) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 46 hedge fund portfolios held Arch Capital Group Ltd. (NASDAQ:ACGL) at the end of the first quarter, which was 41 in the previous quarter. While we acknowledge the potential of Arch Capital Group Ltd. (NASDAQ:ACGL) 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 Arch Capital Group Ltd. (NASDAQ:ACGL) and shared Madison Large Cap Fund's views on the company. In addition, please check out our hedge fund investor letters Q2 2025 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.