Here’s Why Baron Small Cap Fund Sold ODDITY Tech Ltd. (ODD)

2 days ago 3

Soumya Eswaran

Tue, May 5, 2026 astatine 9:00 AM CDT 3 min read

Baron Capital, an concern absorption company, released its Q1 2026 capitalist missive for the “Baron Small Cap Fund”. A transcript of the missive tin beryllium downloaded here. Baron Small Cap Fund was down 7.90% (Institutional Shares) successful Q1 2026, trailing the Russell 2000 Growth Index’s -2.81% return. The archetypal 4th started with optimism driven by expectations for higher maturation and involvement complaint cuts, portion the marketplace sentiment shifted astatine the extremity of the quarter. The merchandise of caller AI applications unsettled markets owed to fears of disruption and semipermanent effects connected software, causing stocks successful these sectors to decline. In precocious February, the Iran warfare caused lipid prices to spike, starring to rising involvement rates and inflation. In addition, delight cheque the Fund’s apical 5 holdings to cognize its champion picks successful 2026.

In its first-quarter 2026 capitalist letter, Baron Small Cap Fund highlighted stocks similar Oddity Tech Ltd. (NASDAQ:ODD). Oddity Tech Ltd. (NASDAQ:ODD), a user tech company, builds a digital-first marque for the quality and wellness market. On May 4, 2026, Oddity Tech Ltd. (NASDAQ:ODD) closed astatine $15.27 per share. One-month instrumentality of Oddity Tech Ltd. (NASDAQ:ODD) was 5.44%, and its shares mislaid 76.75% implicit the past 52 weeks. Oddity Tech Ltd. (NASDAQ:ODD) has a marketplace capitalization of $877.09 million.

Baron Small Cap Fund stated the pursuing regarding Oddity Tech Ltd. (NASDAQ:ODD) successful its Q1 2026 capitalist letter:

"We sold Oddity Tech Ltd. (NASDAQ:ODD) aft a Meta algorithm update proved incompatible with the company's "Try Before You Buy" model, routing ads toward low-intent audiences and sending lawsuit acquisition costs to levels that made caller lawsuit acquisition unprofitable. This forced absorption to propulsion backmost connected maturation successful selling during their highest Q1 acquisition window. With nary steadfast timeline for solution and a betterment way that requires rebuilding halfway prediction models and retooling the acquisition funnel, we decided to exit the position."

Oddity Tech Ltd. (NASDAQ:ODD) is not connected our database of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 25 hedge money portfolios held Oddity Tech Ltd. (NASDAQ:ODD) astatine the extremity of the 4th quarter, compared to 31 successful the erstwhile quarter. While we admit the imaginable of Oddity Tech Ltd. (NASDAQ:ODD) arsenic an investment, we judge definite AI stocks connection greater upside imaginable and transportation little downside risk. If you're looking for an highly undervalued AI banal that besides stands to payment importantly from Trump-era tariffs and the onshoring trend, spot our escaped study connected the best short-term AI stock.

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