Is Capital One Financial Corporation (COF) Driving Value Through Acquisition?

Baron Funds, an investment management company, released its “Baron FinTech Fund” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the third quarter, the fund fell 4.29% (Institutional Shares) compared to a 1.90% decline for the FactSet Global FinTech Index (Benchmark). Since its inception, the fund has appreciated at an annualized rate of 11.10%, compared to a 4.00% return for the Benchmark. The market strength in the quarter was primarily driven by the resumption of Federal Reserve (the Fed) rate cuts and AI optimism. 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 FinTech Fund highlighted stocks such as Capital One Financial Corporation (NYSE:COF). Capital One Financial Corporation (NYSE:COF) is a financial services holding company for Capital One, National Association that offers various financial products and services. The one-month return of Capital One Financial Corporation (NYSE:COF) was -2.10%, and its shares gained 15.03% of their value over the last 52 weeks. On November 14, 2025, Capital One Financial Corporation (NYSE:COF) stock closed at $211.15 per share, with a market capitalization of $137.827 billion.

Baron FinTech Fund stated the following regarding Capital One Financial Corporation (NYSE:COF) in its third quarter 2025 investor letter:

"During the quarter, we invested in Capital One Financial Corporation (NYSE:COF), a leading credit card issuer. We believe Capital One’s acquisition of Discover is a game-changer that will create significant value through network ownership and market share gains.

Founded in 1994 by Chairman/CEO Richard Fairbank and Nigel Morris, Capital One pioneered the use of data and analytics to market credit cards and underwrite loans. Instead of treating credit cards as a homogenous product like the rest of the industry, Fairbank and Morris used vast amounts of data paired with quantitative analysis to offer the right product to the right customer at the right price. Fairbank is an adept operator having made several important strategic decisions over the years, such as acquiring retail banks with stable consumer deposit franchises to eliminate the company’s dependence on the fickle wholesale funding market. In 2012, the company launched a comprehensive digital transformation initiative that, according to management, would “build a technology company that does banking instead of a bank that just uses technology.” By 2020, Capital One became the first major U.S. bank to fully exit its legacy data centers and move to the public cloud, enabling faster innovation and the use of machine learning and AI. Management recognized the importance of building their own applications, so they brought application development in-house and massively expanded the technology team to over 12,000 software engineers. Management’s strategic vision and tech-led approach have led to significant growth, with assets growing by 9 times over the last 20 years…” (Click here to read the full text)

Capital One Financial Corporation (NYSE:COF) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 132 hedge fund portfolios held Capital One Financial Corporation (NYSE:COF) at the end of the second quarter, up from 93 in the previous quarter. While we acknowledge the potential of Capital One Financial Corporation (NYSE:COF) 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 Capital One Financial Corporation (NYSE:COF) and shared the list of stocks Jim Cramer discussed. 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.