Baron International Growth Fund: Latest Insights and Commentary

The Review and Outlook for period ending June 30, 2025, is not yet available.

CONTRIBUTORS

• HD Korea Shipbuilding & Offshore Engineering Co., Ltd. is the shipbuilding and offshore engineering sub-holding company of HD Hyundai, overseeing key affiliates including HD Hyundai Heavy Industries, a leading global shipbuilder and engine manufacturer. Shares rose during the quarter on improving profit margin visibility, backlog growth, and increasing evidence of a sizable long-term opportunity in the naval and defense business. The stock also benefited from broader strength in Korean equities—particularly among chaebol-affiliated companies (large family-controlled conglomerates)—following the Korean presidential election outcome, which is expected to lead to shareholder-friendly corporate governance reforms. We continue to hold shares and remain confident in the company's long-term outlook.
• Waga Energy SA is a technology-based clean energy company that has developed and commercialized its proprietary “WAGABOX” system, which captures landfill methane and converts it into renewable natural gas. Shares appreciated sharply during the quarter, fully recovering losses from the prior quarter, supported by strong project execution and a series of positive pipeline announcements. Late in the quarter, Waga received a takeover offer at a sizable premium from EQT AB, a leading private equity firm based in Sweden. While we are disappointed that the company will be taken private—given its strong positioning for long-term, sustainable, and profitable growth—we are maintaining our position as the transaction develops.
• ODDITY Tech Ltd. intends to transform the beauty and wellness market by using proprietary technologies to sell exclusively online and launch innovative new products. ODDITY is uniquely positioned at the intersection of the beauty and wellness, technology, and health care technology spaces, and is poised to capitalize on the consumer shift toward e-commerce in categories that have historically relied on the wholesale model and high-touch retail environments. Shares of ODDITY increased following better-than-anticipated quarterly results, with double-digit revenue growth from both IL MAKIAGE (its prestige cosmetics brand) and SpoiledChild (its wellness brand offering skincare, haircare, and supplements). ODDITY also remains on track to launch its third brand in the second half of the year. Building on this momentum, management raised full-year guidance for 2025. We like ODDITY’s unique molecular discovery platform and think the company is well positioned to deliver strong, profitable growth through its use of AI and machine learning to drive customer conversion and repeat purchase behavior.

 

DETRACTORS

• Alibaba Group Holding Limited is the largest retailer and e-commerce company in China. Alibaba operates shopping platforms Taobao and Tmall, and has businesses spanning logistics, local services, digital media, and cloud computing. Shares of Alibaba were pressured by quarterly results that were solid but fell short of elevated investor expectations, as well as heightened macroeconomic and geopolitical uncertainty impacting international stocks following Liberation Day. Alibaba is actively pursuing Artificial General Intelligence, ramping its capital expenditures over the next three years to build out its cloud infrastructure layer and add AI capabilities to existing apps (e.g., consumer search). Within its commerce business, the core market is showing continued positive signs of stabilization, and improved profitability should follow. We retain conviction that Alibaba is well positioned to benefit from China's ongoing growth in e-commerce and cloud, although competitive concerns remain.
• Full Truck Alliance Co. Ltd. (FTA), China’s leading digital freight platform, detracted from performance during the quarter. While FTA delivered strong quarterly results, with solid revenue growth and margin improvement, it reported muted earnings guidance and revised its full-year profit forecast lower to reflect increased AI investment and anticipated losses from planned acquisitions, which disappointed the market. Shares were also pressured by growing concerns over the potential delisting of FTA’s American Depositary Receipts from U.S. exchanges, fueled in part by fears that the Trump administration could take a harder stance on Chinese listings. This is particularly concerning for FTA, which does not yet have a Hong Kong listing, though the company is actively preparing for one. We retain conviction in FTA’s growth outlook, supported by expanding market share, higher take rate potential, and long-term benefits from its strategic investments in AI and logistics technology.
• Argenx SE is a biotechnology company best known for developing Vyvgart, the leading FcRn inhibitor for the treatment of autoimmune conditions. Shares declined after Q1 Vyvgart sales came in below elevated investor expectations due to a combination of 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 both generalized myasthenia gravis and chronic inflammatory demyelinating polyneuropathy. Over time, we expect Vyvgart to demonstrate efficacy across an expanding range of autoantibody-driven autoimmune conditions, supported by encouraging Phase 2 myositis data recently presented by argenx at a major medical conference.