FIGS (FIGS) Surged 18.6% in Q3

Baron Funds, an investment management company, released its “Baron Focused Growth Fund” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. The Fund delivered strong results in the third quarter, appreciating 4.83% (Institutional Shares); however, the performance underperformed the Russell 2500 Growth Index’s (the Benchmark) 10.73% gain. The fund's underperformance stemmed from concerns over a slowdown in economic growth affecting the fund’s more economically sensitive Consumer Discretionary stocks. Furthermore, the rise in competitive pressures has adversely affected the valuations of a few of its holdings. 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 Focused Growth Fund highlighted stocks such as FIGS, Inc. (NYSE:FIGS). Headquartered in Santa Monica, California, FIGS, Inc. (NYSE:FIGS) is a direct-to-consumer healthcare apparel and lifestyle company. The one-month return of FIGS, Inc. (NYSE:FIGS) was 9.22%, and its shares gained 13.64% of their value over the last 52 weeks. On November 5, 2025, FIGS, Inc. (NYSE:FIGS) stock closed at $7.58 per share, with a market capitalization of $1.238 billion.

Baron Focused Growth Fund stated the following regarding FIGS, Inc. (NYSE:FIGS) in its third quarter 2025 investor letter:

"Shares of FIGS, Inc. (NYSE:FIGS) increased 18.6% in the quarter and added 35 bps to performance. The company is generating strong results and accelerating revenue from recent investments made over the past year. This is despite making a conscious decision to pull back on promotions. After several years of industry pressure, FIGS is now seeing more normal purchasing and replenishment patterns while also benefiting from specific initiatives around product and marketing that are resonating with its customers. The company is also seeing better-than-expected margin improvements as they begin to get better efficiency out of their new fulfillment center. We continue to believe FIGS can take share in the attractive $80 billion global health care apparel industry. According to the Bureau of Labor Statistics, health care remains one of the fastest growing employment industries in the U.S . and FIGS benefits from being a need-based, replenishment item. The company is well positioned to take share in this industry through its premium, high-quality products sold advantageously through its website and stores. In addition to growing its core scrubs business, we believe that FIGS will also see outsized growth from its initiative to grow stores, business to business revenue, and expand internationally. We believe the revenue acceleration combined with margins expansions and strong cash generation should leave the company well positioned for further growth over time."

FIGS, Inc. (NYSE:FIGS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 24 hedge fund portfolios held FIGS, Inc. (NYSE:FIGS) at the end of the second quarter, up from 13 in the previous quarter.  While we acknowledge the potential of FIGS, Inc. (NYSE:FIGS) 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 FIGS, Inc. (NYSE:FIGS) and shared the list of best quality penny stocks to buy according to hedge funds. 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.