What is Contributing to Robinhood Markets' (HOOD) Strong Performance?

Baron Funds, an investment management company, released its “Baron FinTech Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. U.S. equities closed 5% lower in Q1, following a sharp decline in March. Markets started well with the S&P 500 Index reaching new highs. However, concerns about tariffs, inflation, and softer economic growth, along with concerns about AI secular growth, contributed to risk-off conditions. In the first quarter, the fund fell 1.31% (Institutional Shares) compared to a -7.52% return for the FactSet Global FinTech Index (Benchmark) and a -4.27% decline for the S&P 500 index. Since its inception, the fund has appreciated at an annualized rate of 11.27%, compared to a 2.22% return for the Benchmark. 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 FinTech Fund highlighted stocks such as Robinhood Markets, Inc. (NASDAQ:HOOD). Robinhood Markets, Inc. (NASDAQ:HOOD) is a financial services platform that allows users to invest in stocks, exchange-traded funds (ETFs), American depository receipts, options, gold, and cryptocurrencies. The one-month return of Robinhood Markets, Inc. (NASDAQ:HOOD) was 27.75%, and its shares gained 208.00% of their value over the last 52 weeks. On May 23, 2025, Robinhood Markets, Inc. (NASDAQ:HOOD) stock closed at $63.17 per share with a market capitalization of $55.75 billion.

Baron FinTech Fund stated the following regarding Robinhood Markets, Inc. (NASDAQ:HOOD) in its Q1 2025 investor letter:

"We added to our position in online broker Robinhood Markets, Inc. (NASDAQ:HOOD), which was a new purchase in the prior quarter. The company reported very strong financial results for the fourth quarter with elevated trading volumes and robust growth in accounts and deposits. Client trading activity has moderated since the start of the year but remains elevated overall and the number of Gold subscribers grew 20% in the first quarter alone. At its Gold Summit in March, the company released three new products, including a low-cost advisory service, an AI-powered research tool, and a digital banking service. Robinhood is building out new products at a rapid clip yet still has a long runway to reach parity with other brokers. Additional service offerings should support continued market share gains."

Robinhood Markets, Inc. (NASDAQ:HOOD) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 76 hedge fund portfolios held Robinhood Markets, Inc. (NASDAQ:HOOD) at the end of the fourth quarter which was 79 in the previous quarter. In the first quarter, Robinhood Markets, Inc. (NASDAQ:HOOD) experienced a revenue increase of 50%, reaching $927 million compared to the prior year’s quarter. While we acknowledge the potential of Robinhood Markets, Inc. (NASDAQ:HOOD) 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 Robinhood Markets, Inc. (NASDAQ:HOOD) and shared the list of best stocks to buy according to Jim Simons’ Renaissance Technologies. In addition, please check out our hedge fund investor letters Q1 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.