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Q3 Fund Letters Expose Wide Performance Gap as AI Leaders Drive Standouts

Managers point to stock-level drivers with trims reflecting valuation discipline.

Overview

  • Meridian Growth Fund reported a -1.78% net return versus the Russell 2500 Growth’s 10.73%, attributing the shortfall to sector positioning and staying within its investment discipline.
  • Meridian Contrarian Fund gained 6.72% but trailed the Russell 2500 and Russell 2500 Value, while Meridian Small Cap Growth returned 4.20% versus 12.19% for its benchmark.
  • Baron Fifth Avenue Growth Fund highlighted Microsoft’s momentum with Azure revenue growth accelerating to 39% and AI foundry usage exceeding 500 trillion tokens, up 700% year over year.
  • Stock-level attribution included Sprout Social falling after another guidance cut despite a results beat, Align easing on softer teen conversions, and Madrigal rallying on Rezdiffra’s launch pacing above $1 billion annualized.
  • Managers detailed trims into strength across multiple holdings—such as Halozyme, Planet Labs, nLIGHT, Penguin Solutions, and Turning Point Brands—as part of ongoing risk and valuation management.