Baron Capital, an investment management company, released its Q3 2026 investor letter for the “Baron Small Cap Fund.” The letter can be downloaded here. In Q3, the Baron Small Cap Fund declined 7.69% (Institutional Shares), outperforming the Russell 2000 Growth Index, which fell 9.39%. Year to date, the Fund is down 4.30%, while the Index is up 10.71%. The Fund’s initial strength in July and August was followed by a September sell-off driven by rising interest rates, inflation concerns, and geopolitical tensions, notably in the Middle East. The Fund’s relative outperformance was driven by strong stock selection in Information Technology, which rose 7.16% while the Index’s IT stocks fell sharply. Stock selection in Financials and Health Care was also favorable. The Fund is, and has been, underweight to Momentum and Beta. Both factors were out of favor this quarter, which helped relative performance. Long-held positions have generated significant returns, with 39% of assets in stocks held for over ten years compounding at 17.2% annually. Despite current pressures and macroeconomic concerns, management remains optimistic about the potential for strong long-term returns in quality small-cap stocks. In addition, please check the Fund’s top five holdings to know its best picks in 2026.
In its Q3 2026 investor letter, Baron Small Cap Fund highlighted that Intapp, Inc. (NASDAQ:INTA) contributed 0.57% to returns. Intapp, Inc. (NASDAQ:INTA) is a vertical software company that provides AI-powered solutions for professional and financial firms. On November 12, 2026, Intapp, Inc. (NASDAQ:INTA) closed at $45.90 per share with a market capitalization of $3.52 billion. Over the past month, Intapp, Inc. (NASDAQ:INTA) rose 6.90%, extending its 52-week gain to 8.31%.
Baron Small Cap Fund stated the following regarding Intapp, Inc. (NASDAQ:INTA) in its Q3 2026 investor letter:
“Intapp, Inc. (NASDAQ:INTA) is a vertical software platform serving professional and financial services firms. Shares rose on strong fiscal fourth quarter results, with cloud annual recurring revenue (ARR) growing 29% year-over-year, subscription revenue rising 27%, cloud net revenue retention holding at 123%, and non-GAAP operating margin expanding to 22.5%. The company signed a record number of cloud migrations and provided fiscal 2027 guidance above consensus. Shares also benefited from a recovery in sentiment and valuation multiples across application software. Intapp’s role is growing in compliance and conflicts management for major AI providers serving the legal industry, including Legora, Harvey, Anthropic, Microsoft, and OpenAI. We believe Intapp can scale to more than $1 billion in ARR by fiscal 2029, a 19% annual CAGR, while expanding profit margins.”
Source: finance.yahoo.com
