Baron Funds, an investment management company, released its “Baron Discovery Fund” second quarter 2024 investor letter. A copy of the letter can be downloaded here. In the second quarter, the fund (Institutional Shares) declined 7.78% underperforming the 2.92% return for the Russell 2000 Growth Index. The lion’s share of negative attribution and 6.52% of negative performance of the fund during the quarter were attributed to the ten worst-performing equities. The firm believes downward movements are more technically tied to macroeconomic issues and the trading environment and could quickly revert. In addition, please check the fund’s top five holdings to know its best picks in 2024.

Baron Discovery Fund highlighted stocks like Montrose Environmental Group, Inc. (NYSE:MEG) in the second quarter 2024 investor letter. Montrose Environmental Group, Inc. (NYSE:MEG) is an environmental services company. The one-month return of Montrose Environmental Group, Inc. (NYSE:MEG) was 0.76%, and its shares lost 16.97% of their value over the last 52 weeks. On August 22, 2024, Montrose Environmental Group, Inc. (NYSE:MEG) stock closed at $31.91 per share with a market capitalization of $1.092 billion.

Baron Discovery Fund stated the following regarding Montrose Environmental Group, Inc. (NYSE:MEG) in its Q2 2024 investor letter:

"Montrose Environmental Group, Inc. (NYSE:MEG) a leading environmental solutions provider (consulting, testing and remediation), outperformed during the quarter. The company reported a solid quarter driven by strong organic growth as the company is benefiting from both secular trends as well as regulatory tailwinds. During the quarter, the EPA finalized the maximum contaminant levels for PFAS (a so-called “forever chemical”) in water supplies which is expected to be a catalyst for increased remediation spending. Montrose is likely to benefit as it has proprietary equipment to enable PFAS remediation. Adding to organic growth prospects, Montrose sees a robust market for acquisitions and the company did a small equity raise early in the quarter to execute on opportunities. We believe that Montrose can generate over 20% cash flow growth per year for the next several years."

A biohazard waste disposal team safely transferring contaminated water for treatment.

Montrose Environmental Group, Inc. (NYSE:MEG) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 17 hedge fund portfolios held Montrose Environmental Group, Inc. (NYSE:MEG) at the end of the second quarter which was 13 in the previous quarter. Montrose Environmental Group, Inc. (NYSE:MEG)’s revenues surged to a record $173.3 million in the second quarter, an 8.9% increase over Q2 2023, and climbed by 13.1% to $328.7 million in the first half of the year. While we acknowledge the potential of Montrose Environmental Group, Inc. (NYSE:MEG) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.