The following segment was excerpted from the Baron International Growth Fund Q3 2025 Shareholder Letter.
Baron International Growth Fund® (the Fund) gained 6.04% (Institutional Shares) during the third quarter of 2025, while its primary benchmark, the MSCI ACWI ex USA Index (the Benchmark), appreciated 6.89%. The MSCI ACWI ex USA IMI Growth Index (the Proxy Benchmark) gained 5.75% for the quarter. The Fund modestly underperformed the Benchmark while slightly bettering the Proxy Benchmark during a solid quarter for global equities, in our view driven by the onset of a Federal Reserve (the Fed) easing cycle and ongoing announcements of large-scale investment related to AI data center capacity and graphics processing unit (GPU) commitments. We were pleased with our quarterly results, and we remain comfortably ahead of the Proxy Benchmark on a year-to-date and one-year trailing basis.
Top contributors to performance for the quarter
Lynas Rare Earths Limited (OTCPK:LYSCF) is an Australia-based mining and exploration company focused on rare earth minerals. Shares nearly doubled during the quarter as geopolitical and trade tensions underscored the strategic importance of supply sources outside China, which controls more than two-thirds of global rare earth production and roughly 80% of processing and refining capacity. Prices for rare earth minerals and related equities surged after the U.S. signaled support for establishing price floors to encourage non-China mining and production. We retain long-term conviction in Lynas’ earnings potential and strategic value and remain shareholders.
Argenx SE (ARGX) is a biotechnology company best known for developing Vyvgart, the leading FcRn inhibitor for the treatment of autoimmune conditions. Shares rose after second-quarter Vyvgart sales meaningfully exceeded investor expectations, rebounding from prior weakness linked to seasonal factors (such as insurance reverification) and higher Medicare Part D utilization and associated discounts. Our conversations with management and neurologists continue to reinforce Vyvgart’s value as an important treatment option with strong long-term growth potential. The drug continues to launch well in generalized myasthenia gravis, and its launch in chronic inflammatory demyelinating polyneuropathy is off to a strong start. Over time, we expect Vyvgart to demonstrate efficacy across an expanding range of autoantibody-driven autoimmune conditions, and we are encouraged by argenx’s progress with its next pipeline candidate, ARGX-119, in neuromuscular diseases.
Lundin Mining Corporation (OTCPK:LUNMF) is a high-growth, global mining operator with an emphasis on copper and gold. Shares rose markedly during the quarter, initially following solid operating and financial results. The stock advanced further after competitor Freeport-McMoRan Inc. suspended production at the world’s second-largest copper mine due to a tragic mudslide, tightening global supply and triggering a market imbalance expected to persist for some time. Lundin Mining’s earnings have also benefited from the strong rise in gold prices over the past year. We retain conviction in the company’s capital allocation, production growth, and earnings potential.
Top detractors from performance for the quarter
Constellation Software Inc. (OTCPK:CNSWF), a holding company that owns and operates a large portfolio of vertical-market software businesses, detracted from performance. The company reported solid quarterly financial results, but shares declined due to broader uncertainty around the impact of AI on software and the unexpected announcement that President Mark Leonard would step down for health reasons, though he will remain on the board. We retain conviction that Constellation can continue compounding free cash flow per share at a solid rate. While the company is not immune to macroeconomic headwinds, it benefits from a strong balance sheet, robust profitability and free cash flow generation, and a diversified end-market mix.
InPost S.A. (OTCPK:INPOF)(OTCPK:INPOY), Poland’s leading logistics operator with a rapidly expanding pan-European presence, detracted from performance during the quarter. Allegro, Poland’s top e-commerce platform and InPost’s largest customer—contributing around 15% of group revenue—has begun exploring alternative logistics solutions and partnering with multiple providers. This has raised concerns about potential volume pressure in Poland and further market share erosion once the current Allegro–InPost contract expires in 2027. Despite worst-case fears, we believe a full exit by Allegro is unlikely. InPost controls roughly 70% of parcel lockers and 90% of out-of-home delivery volumes in Poland, making a complete transition away from its network highly disruptive to service quality. We remain positive on InPost’s market leadership, expanding international footprint, and growing client diversification.
ODDITY Tech Ltd. (ODD) intends to transform the beauty and wellness market by using proprietary technologies to sell exclusively online and launch innovative new products. The company is uniquely positioned at the intersection of beauty, wellness, and technology, and is poised to capitalize on the consumer shift toward e-commerce in categories that have historically relied on wholesale and high-touch retail models. While ODDITY’s second-quarter results exceeded management and Street expectations, the magnitude of the beat was smaller than investors anticipated, prompting shares to fall. Management also provided additional detail on costs related to the launch of its third brand and the anticipated pressure on first-half 2026 EBITDA margins. We remain shareholders. ODDITY continues to invest heavily in growth while outperforming its long-term targets of 20% top-line growth and a 20% EBITDA margin. We maintain conviction in the company’s value creation potential across its IL MAKIAGE and SpoiledChild lines, as well as its new METHODIQ brand.
Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.
Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
