ETFs & Funds
Home›ETFs & Funds›Fund Industry›Baron Discovery Fund says it remains bullish on Shake…
Baron Discovery Fund says it remains bullish on Shake Shack
The fund cited Shake Shack same-store sales growth of 4.6%, including 1.4% positive traffic, alongside restaurant-level margin up 0.5% to 21.2%.
Baron Capital said its Baron Discovery Fund remained bullish on Shake Shack in its Q2 2026 investor letter, while noting the stock detracted from the fund's performance during the quarter. The fund reported it rose 19.1% for the period using institutional shares, but lagged the Russell 2000 Growth Index, which gained 25.7%.
The investor letter attributed part of the underperformance to a momentum-driven “AI winners” trade and the fund’s underweight in strong-performing momentum and beta factors. It also said Shake Shack shares fell sharply after the company reported weaker-than-expected first-quarter earnings, characterizing the reaction as tied to communication and expectation-setting rather than an underlying business deterioration.
Baron Capital pointed to operational metrics it views positively, including same-Shack sales growing 4.6%, with 1.4% coming from positive traffic for a third straight quarter. The fund also cited restaurant-level margin expanding 0.5% to 21.2%, while it said adjusted cash flow, measured as EBITDA, missed expectations due to the timing of certain costs.
In the same letter, Baron Capital drew parallels between today’s AI market and the late-1990s dot-com bubble, arguing for a long-term approach centered on company fundamentals and valuation rather than chasing momentum. The letter included a snapshot of Shake Shack’s recent trading, saying the stock closed at $71.77 per share on August 11, 2026, with a $3.07 billion market capitalization.
Latest closeRussell 2000 3,052.85 ▲0.2%