The Fund’s Core Growth investments increased 3.0% in the quarter, underperforming the Index which increased 6.04%, mainly due to a 3.4% decline in GDS Holdings Limited (GDS, Financial), the largest data center provider in China. This was amid a broader technical sell-off in U.S.-listed Chinese internet businesses, as the Chinese government tries to restrict U.S. listings of Chinese companies and adds regulations to have more control over them. We added to our position in the quarter as the company continues to grow three to four times as fast as peers and yet trades at a significant discount to them. We believe this discount should narrow as GDS continues to invest in its data center businesses and generates strong returns on investment as it continues to experience robust demand for space. The company has significant land holdings and power commitments that are difficult to attain.
From Ron Baron (Trades, Portfolio)'s Baron Focused Growth Fund second-quarter 2021 letter.