Conviction in Gartner (IT) Backed by Competitive Advantage

Baron Capital, an investment management company, reported its Q2 2026 investor letter for the Baron Asset Fund in a recent release. The letter highlighted the performance of various U.S. equities, with a focus on AI advancements and the Information Technology sector. The Baron Asset Fund experienced an 18.98% return for the quarter, surpassing the Russell Midcap Growth Index's 14.55% return.

The fund's success was attributed to strategic stock selection, despite challenges posed by underexposure to certain factors. The fund's investment strategy limited exposure to high-flying sectors but emphasized undervalued software and services. Gartner, Inc. (NYSE:IT), a research and advisory company established in 1979, was mentioned in the letter as one of the fund's holdings.

The company's stock price closed at $183.30 per share on August 13, 2026, with a one-month return of 30.75%. However, the Baron Asset Fund noted that Gartner's performance was negatively impacted by rising AI fears, leading to a 23.21% loss over the past 52 weeks. The fund continues to own Gartner, citing its large addressable market, significant competitive advantage, and robust free cash flow generation.

The company is expected to deploy its funds toward ongoing share repurchases at historically low valuations. Despite Gartner's inclusion in the fund, it is not listed among the 40 Most Popular Stocks Among Hedge Funds Heading Into 2026.