Soumya Eswaran
3 min read
In This Article:
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 MercadoLibre, Inc. (NASDAQ:MELI). MercadoLibre, Inc. (NASDAQ:MELI) is an online commerce platform that operates Mercado Libre Marketplace and Mercado Pago FinTech platforms. The one-month return of MercadoLibre, Inc. (NASDAQ:MELI) was 14.75%, and its shares gained 50.81% of their value over the last 52 weeks. On May 22, 2025, MercadoLibre, Inc. (NASDAQ:MELI) stock closed at $2,606.01 per share with a market capitalization of $129.564 billion.
Baron FinTech Fund stated the following regarding MercadoLibre, Inc. (NASDAQ:MELI) in its Q1 2025 investor letter:
"MercadoLibre, Inc. (NASDAQ:MELI) is the leading e-commerce marketplace and fintech provider in Latin America. Shares rebounded from weakness in the prior quarter after the company reported strong financial results that exceeded Street expectations. In the fourth quarter, revenue grew 37% and operating income grew 44% on an adjusted basis. Margins surprised to the upside, reversing a decline in the prior quarter and alleviating concerns around investment-driven impacts on near-term profitability. MercadoLibre continues to post above-market growth with gross merchandise volume up 56% and total payment volume up 49%, both on a constant-currency basis. In 2024, the company had 100 million marketplace customers and 61 million monthly fintech users with rising engagement due to the company’s compelling value proposition. We believe MercadoLibre remains a prime beneficiary of the secular growth of e-commerce and digital banking in Latin America."
A customer using their phone to access an online commerce platform.
MercadoLibre, Inc. (NASDAQ:MELI) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 96 hedge fund portfolios held MercadoLibre, Inc. (NASDAQ:MELI) at the end of the fourth quarter which was 87 in the previous quarter. While we acknowledge the potential of MercadoLibre, Inc. (NASDAQ:MELI) 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.
