Baron International Growth Fund: Latest Insights and Commentary

The Review and Outlook for period ending December 31, 2025, is not yet available.

CONTRIBUTORS

• Lundin Mining Corporation is a base metals producer with a portfolio primarily focused on copper and gold. Shares rose meaningfully during the fourth quarter after the company raised its 2025 copper production outlook and lowered its cash cost guidance. A sharp rally in copper and gold prices also supported performance. We remain constructive on Lundin Mining due to its healthy growth profile, driven by its greenfield Josemaria and Filo del Sol copper projects in Argentina, as well as near-term production growth initiatives at existing mines. Lundin Mining has a solid acquisition track record and a history of expanding production and extending the operating lives of its acquired mines. The founding family retains meaningful oversight of the business, with the founder’s grandson serving as President and CEO.

• Semiconductor giant Taiwan Semiconductor Manufacturing Company Limited (TSMC) contributed to performance during the quarter, driven by robust demand for AI chips. We retain conviction that TSMC’s technological leadership, pricing power, and exposure to secular growth markets—including AI and high-performance computing, automotive, 5G, and Internet of Things—will allow the company to sustain strong double-digit earnings growth over the next several years.

• Bank of Ireland Group plc is one of the largest banks in the Republic of Ireland and Northern Ireland. Shares rose during the quarter following strong quarterly results and an upward revision to net interest income guidance, which drove higher earnings expectations. Management highlighted solid loan and deposit momentum in Ireland, disciplined cost control, and continued organic capital generation, supporting earnings durability. Bank of Ireland’s margins are more resilient than those of EU peers as interest rates ease, benefiting from a sizeable structural hedge that locks in higher yields from prior rate increases and cushions the impact of lower policy rates. Strong capital ratios and confidence around ongoing capital returns further reinforce our positive view.

 

DETRACTORS

• eDreams ODIGEO SA is a Spain-based online travel agency that offers a subscription-based travel savings program, Prime, covering flights and hotels. Shares declined during the quarter following the company’s decision to pursue a significant growth investment plan, a pivot toward monthly and quarterly subscription offerings, and near-term inventory access issues with supplier Ryanair. In a departure from prior targets, eDreams now plans to invest more heavily in new markets and in European rail. While the company has previously tested various subscription durations, the broader shift toward shorter subscription terms is expected to pressure cash flow over the next several years. Longer term, we believe Prime’s underlying value proposition remains compelling for customers, particularly as the product roadmap expands into hotels and incorporates generative AI-driven enhancements. As Prime matures, profitability has continued to improve, supported by lower marketing spend on customer acquisition. We continue to research and monitor the company’s newer investment plans and progress across these initiatives.

• Japanese multinational food company Ajinomoto Co., Inc. detracted from performance due to weaker-than-expected growth in its Seasonings business. We believe this slowdown is temporary and that long-term growth will be supported by Ajinomoto’s high-quality products and strong brand, along with increasing demand from Southeast Asia’s emerging middle class. We are particularly optimistic about the prospects for Ajinomoto Build-up Film (ABF), an insulating material used in the packaging of high-performance semiconductors. Ajinomoto invented ABF in the late 1990s and has since maintained a near-monopoly position in this material, which plays a critical role in electrical isolation, signal routing, and heat dissipation. We expect high-margin ABF revenue to surge over the next five years, driven by robust demand for AI accelerators. As a result, we believe Ajinomoto has the potential to double earnings per share over this period, with ABF accounting for the majority of profit growth.

• ODDITY Tech Ltd. intends to transform the beauty and wellness market by using proprietary technology to sell and launch products exclusively online. Shares declined amid investor concerns around category strength following cautious commentary from industry peers, as well as credit card data indicating a potential deceleration at the company’s largest brand, Il Makiage. ODDITY is also launching its third platform, MethodIQ, which required incremental upfront marketing investment during the year. Management expects MethodIQ to ramp quickly and deliver strong financial results in the coming years. Overall, the business remains well positioned to achieve its full-year target of approximately 20% revenue growth at a 20% margin. ODDITY has demonstrated an ability to create innovative products and successfully launch new brands by leveraging its molecule formulation and marketing capabilities. We continue to own the stock given its attractive valuation relative to future earnings, strong cash flow generation, solid balance sheet, and long-term growth opportunity in a large, underpenetrated e-commerce category.