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Baron Discovery Fund reinitiates position in Advanced Drainage Systems
The fund reported a 19.1% gain in Q2 2026, but said results lagged the Russell 2000 Growth Index due to an “AI winners” momentum trade.
Baron Discovery Fund, managed by Baron Capital, said it reinitiated a position in Advanced Drainage Systems, Inc. during the second quarter of 2026. The fund highlighted Advanced Drainage Systems as a manufacturer and marketer of thermoplastic corrugated pipes and related water management products, spanning pipes, drainage structures, storage chambers, and water treatment systems.
Baron Capital said it views Advanced Drainage Systems as a high quality business in a fragmented market where it is the only national player of scale, adding that it is roughly 10 to 15 times larger than its next closest competitors. It also pointed to the company’s position in stormwater and onsite wastewater management, from initial collection through return of treated water to the environment.
In its Q2 2026 investor letter, Baron Discovery Fund reported a 19.1% gain for the quarter in institutional shares, but acknowledged it underperformed the Russell 2000 Growth Index, which rose 25.7%. The firm attributed the lag to a momentum driven “AI winners” trade, saying the fund’s underweight to strong performing momentum and beta factors contributed to a 6.6% underperformance.
The outlet also noted that Advanced Drainage Systems closed at $143.65 per share on August 11, 2026, implying a market capitalization of $10.83 billion. It cited a one month return of -5.0% for the stock and a 0.8% gain over the past 52 weeks.
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