Baron Discovery Fund Trimmed Its Stake in Montrose Environmental Group (MEG)

Baron Funds, an investment management company, released its “Baron Discovery Fund” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. Year-to-date, the fund was up 10.75% (Institutional Shares), compared to a 11.65% return for the Russell 2000 Growth Index. The fund was up 2.85% in the third quarter, lagging behind the Index’s 12.19% return.  In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its third-quarter 2025 investor letter, Baron Discovery Fund highlighted stocks such as Montrose Environmental Group, Inc. (NYSE:MEG). Montrose Environmental Group, Inc. (NYSE:MEG) is an environmental services company. The one-month return of Montrose Environmental Group, Inc. (NYSE:MEG) was -5.40%, and its shares lost 3.65% of their value over the last 52 weeks.  On October 29, 2025, Montrose Environmental Group, Inc. (NYSE:MEG) stock closed at $26.64 per share, with a market capitalization of $940.032 million.

Baron Discovery Fund stated the following regarding Montrose Environmental Group, Inc. (NYSE:MEG) in its third quarter 2025 investor letter:

"Shares of Montrose Environmental Group, Inc. (NYSE:MEG), a leading environmental services company, continued their significant rebound which started in the second quarter. Fears of adverse policy changes at the Environmental Protection Agency under President Trump continue to fade, as we had predicted. Similar to Kratos, we trimmed our investment in Montrose to manage a large position size. We continue to believe in the long-term prospects of the company and see optionality in upside in its PFAS cleanup technology, which deals with so-called “forever plastics.”"

Montrose Environmental Group, Inc. (NYSE:MEG) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 11 hedge fund portfolios held Montrose Environmental Group, Inc. (NYSE:MEG) at the end of the second quarter, compared to 14 in the previous quarter. While we acknowledge the potential of Montrose Environmental Group, Inc. (NYSE:MEG) 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 Montrose Environmental Group, Inc. (NYSE:MEG) and shared the list of best waste management stocks to buy. Montrose Environmental Group, Inc. (NYSE:MEG) contributed to Baron Discovery Fund's performance in the previous quarter. In addition, please check out our hedge fund investor letters Q3 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.