| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 10.34% | 11.95% | 4.12% |
Baron Health Care Fund returned 11.99% in Q2 2026, outperforming the Russell 3000 Health Care Index by 151 basis points through solid stock selection in pharmaceuticals, biotechnology, health care equipment, and life sciences tools. Key contributors included Eli Lilly, whose GLP-1 obesity portfolio continues demonstrating commercial leadership with all major PBMs now providing coverage and next-generation pipeline data reinforcing the company's position in a category that could exceed $150 billion. Revolution Medicines contributed following groundbreaking Phase 3 pancreatic cancer data showing 60% reduction in death risk, representing the first major advance in over 30 years. The manager re-established positions in UnitedHealth and Elevance to capitalize on the improving managed care cycle as companies rebuild profitability after exiting unprofitable Medicare Advantage markets. Biotechnology funding is up 130% year-over-year with 2026 on track for the strongest year since 2021, while M&A activity remains robust as large pharma companies replace patent-expiring products. Medical device stocks face near-term headwinds from ACA subsidy expiration and Medicaid work requirements but trade at discounts creating potential opportunities. The portfolio holds 43 stocks with 51% in top 10 holdings, overweight life sciences tools and biotechnology.
Baron Health Care Fund invests in competitively advantaged growth companies across the health care sector that solve problems by reducing costs, enhancing efficiency, or improving patient outcomes, with a focus on businesses offering secular growth opportunities, durable competitive advantages, and strong management teams positioned to benefit from long-term drivers including aging demographics, chronic disease prevalence, and biotechnology advances.
The manager continues to believe the long-term outlook for Health Care is positive given favorable secular growth drivers including aging population, rising incidence of chronic diseases, advances in biotechnology, medical technology and diagnostics, and increased health care spending. Trends within Health Care continue to improve with biotechnology funding on track for the strongest year since 2021 and M&A activity remaining robust. The managed care industry is recovering from multi-year challenges with improving margins expected. However, medical device companies face near-term headwinds from moderating utilization due to ACA subsidy expiration and upcoming Medicaid work requirements, creating valuation opportunities. The FDA's more industry-friendly stance and HHS initiatives to accelerate drug development provide additional tailwinds. The manager remains focused on identifying competitively advantaged growth companies across multiple secular themes including genomics, innovative medical devices, anti-obesity medications, life sciences tools, and minimally invasive surgery.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jul 21 2026 | 2026 Q2 | ARGX, AZN, ELV, EW, GH, GILD, INSM, IONS, ISRG, JNJ, LLY, MTD, RDNT, ROIV, RVMD, SYK, TEVA, TMO, UNH, WELL | Biotechnology, GLP-1, healthcare, M&A, Managed Care, Medical Devices, Oncology, Pharmaceuticals | - | Baron Health Care Fund outperformed in Q2 2026 driven by Eli Lilly's GLP-1 leadership and Revolution Medicines' breakthrough pancreatic cancer data. The manager re-entered managed care stocks UnitedHealth and Elevance to capture margin recovery as the insurance cycle turns favorable. Biotechnology funding surged 130% year-over-year while M&A activity accelerated. Medical device valuations compressed on ACA subsidy expiration concerns, creating selective opportunities despite near-term utilization headwinds. |
| Apr 28 2026 | 2026 Q1 | ACLX, ARGX, AZN, GH, JNJ, LLY, MRK, NTRA, RDNT, ROIV, TMO, WELL | AI, Biotechnology, Diagnostics, GLP1, healthcare, M&A, Pharmaceuticals | - | Healthcare fund underperformed on limited large-cap pharma exposure but maintains conviction in secular growth themes. Strong M&A activity with $33 billion Q1 deals supports biopharma thesis. Added diagnostic leaders Guardant Health and Natera while reducing risk in argenx. Manager sees attractive valuations and expects continued consolidation driven by patent cliff pressures and favorable regulatory environment. |
| Jan 23 2026 | 2025 Q4 | ABBV, ACLX, ARGX, ARQT, AZN, BSX, DHR, DSXY, EHC, ELAN, INSM, ISRG, LLY, MASI, MTD, PEN, RDNT, RGEN, SYK, TEVA, TMO, WELL | Biotechnology, GLP1, healthcare, Life Sciences, M&A, Medical Devices, Pharmaceuticals |
LLY ARGX TEVA ARQQ DOCS EHC TMO ARQT WELL ELAN RGEN |
Baron Health Care Fund outperformed in Q4 2025 with strong biotechnology stock selection, led by Cidara Therapeutics M&A and Eli Lilly's GLP-1 success. Biotechnology funding surged 94% year-over-year while M&A accelerates due to pharmaceutical patent cliffs. The Fund maintains overweight positions in biotech and life sciences tools, targeting secular growth opportunities in an improving sector environment. |
| Sep 30 2025 | 2025 Q3 | ABBV, ACLX, ARGX, AZN, BSX, CDTX, COO, HRTX, IMVT, INSM, IONS, ISRG, JNJ, LLY, MASI, PFE, RDNT, ROIV, SYK, TMO, UNH, WAT, XENE | AI, Biotechnology, GLP1, growth, healthcare, Medical Devices, Pharmaceuticals | - | Baron Health Care Fund delivered 5.39% returns in Q3 2025, driven by strong biotechnology stock selection, particularly argenx and Insmed benefiting from clinical successes. AI-enabled healthcare services like RadNet also contributed. Equipment and pharma holdings weighed on performance amid competitive pressures and regulatory concerns. The manager remains optimistic on healthcare's secular growth drivers including aging demographics and technological innovation. |
| Mar 31 2025 | 2025 Q1 | NVDA | AI, Bonds, Buybacks, emerging markets, Europe, gold, inflation, technology | - | Global markets are in an inflationary boom with AI driving technology valuations to extreme levels while government debt spirals out of control. Corporate buybacks and limited investment alternatives force capital into equities despite overvaluation risks. The falling dollar benefits emerging markets, but any AI disappointment or sovereign debt crisis could trigger significant corrections. |
| Dec 31 2024 | 2024 Q4 | AMZN, GLXY.TO, GOOGL, LRCX, META, MSFT, MU, SOXX, V, VOO | AI, Fed policy, Global Markets, large cap, Portfolio Management, semiconductors, technology | - | Alpine Capital executed successful portfolio rotations in Q3, selling Micron for semiconductor ETF exposure while adding Lam Research. The firm maintains strong conviction in AI infrastructure spending by mega-caps, viewing Fed rate cuts as supportive for risk assets. Their concentrated, low-turnover approach targets long-term outperformance despite higher volatility, positioning for continued AI-driven technological transformation. |
| Sep 30 2024 | 2024 Q3 | - | - | - | |
| Jun 30 2024 | 2024 Q2 | - | - | - | |
| Mar 31 2024 | 2024 Q1 | AMZN, GS, HCLTECH.NS, INFY, JPM, MSFT, ORCL, RR.L, TCS.NS, TECHM.NS, WMT | defense, emerging markets, India, Manufacturing, small caps, Trade Policy | - | India-focused small-cap fund weathering U.S. trade tensions through domestic growth resilience and defense indigenization theme. Portfolio concentrated in sub-$500M companies with 6% allocation to defense/aerospace benefiting from government procurement shifts. Managers confident in India's structural advantages including domestic consumption growth, policy reforms, and diversified international partnerships despite near-term tariff headwinds. |
| Dec 31 2023 | 2023 Q4 | - | asset allocation, Fed policy, Long Term, rebalancing, Valuations | - | Fed Chair Powell's warning about elevated equity valuations sparked investor concerns, but the firm argues against market timing based on valuation metrics. While the S&P 500 trades 20% above historical averages, systematic rebalancing rather than wholesale selling has proven more effective historically. The focus remains on long-term discipline through asset allocation management. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
GLP1Eli Lilly's GLP-1 obesity portfolio continues to demonstrate commercial leadership with all three major pharmacy benefit managers now providing coverage, including the new daily oral GLP-1 Foundayo. Phase 3 data for next-generation candidates showed strong efficacy with retinylated delivering weight loss in the high-20% range and eloralintide showing Zepbound-like efficacy. The manager views Lilly's portfolio as the gold standard in a category that could exceed $150 billion. |
Obesity Diabetes Pharmaceuticals Weight Loss Metabolic |
Biopharma M&AM&A activity was strong during the quarter with multiple large transactions including AbbVie's $10.9 billion acquisition of Apogee Therapeutics, GSK's $10.6 billion acquisition of Nuvalent, and Merck KGaA's $11.3 billion acquisition of Bio-Techne. The manager expects M&A activity to continue as large pharmaceutical companies need to replace billions in lost sales from products losing patent protection. The FDA's more industry-friendly stance following personnel changes is also supportive. |
Acquisitions Biotechnology Pharmaceuticals Pipeline Patent Expiry | |
Managed CareThe managed care industry is recovering from a multi-year period of challenges with normalization in rates and utilization expected to lead to margin improvement from depressed levels. The manager re-established positions in UnitedHealth and Elevance after both companies exited unprofitable Medicare Advantage markets, right-sized benefits, and are rebuilding profitability. Application of AI is expected to reduce administrative costs significantly, with earnings power well above current levels. |
Medicare Advantage Health Insurance Utilization Margins Reimbursement | |
GenomicsBillionToOne is disrupting prenatal and oncology genetic testing with its differentiated quantitative counting template technology that enables more sensitive testing. The company reported robust first-quarter results with revenue up 84% year-over-year and 22% operating margins, along with meaningful expansion of commercial insurance coverage for its UNITY prenatal test. The company is making early headway in oncology with SELECT and RESPONSE tests expected to be important future growth drivers. |
Genetic Testing Diagnostics Prenatal Oncology Precision Medicine | |
OncologyRevolution Medicines' Daraxonrasib represents the first major advance in pancreatic cancer in over 30 years, with Phase 3 data showing median overall survival of 13.2 months versus 6.7 months for chemotherapy, reducing the risk of death by 60%. The presentation at ASCO received a standing ovation, which is rare in oncology. The manager expects strong demand and rapid adoption upon FDA approval later this year, with potential peak sales over $20 billion across multiple RAS-driven cancers. |
Cancer RAS Mutations Pancreatic Cancer Lung Cancer Targeted Therapy | |
BiotechnologyBiotechnology funding was up approximately 130% year-over-year with 2026 on track to be the strongest year of funding since 2021. The State Street SPDR S&P Biotech ETF was up 24% in the second quarter, bringing year-to-date returns to almost 30%. This robust IPO and follow-on activity supports spending on new drug pipelines and is a positive leading indicator for life sciences tools companies. The FDA is taking a more industry-friendly stance after personnel changes. |
Biotech Funding IPOs FDA Drug Development Life Sciences | |
Medical DevicesMedical device companies face moderating utilization driven by the expiration of ACA subsidies, which resulted in nearly 4 million people dropping insurance coverage. New Medicaid work requirements scheduled for 2027 could result in loss of coverage for approximately 4.8 million people. These headwinds have caused many medical device stocks to trade at big discounts to historical multiples, creating potential opportunities despite near-term challenges. |
Healthcare Utilization ACA Medicaid Insurance Coverage Valuation | |
Life Science ToolsLife sciences tools companies are benefiting from robust biotechnology funding activity, which is a positive leading indicator for companies selling products and services to biotechnology companies. The manager added to Mettler-Toledo after viewing the negative stock reaction to slightly below-expectations guidance as overblown, and established a new position in Sartorius Stedim Biotech, a leading supplier of single-use bioreactors for biologic drug production in an attractive end market growing 8% to 10%. |
Bioprocessing Bioreactors Precision Instruments Biologics Lab Equipment | |
| 2026 Q1 |
Biopharma M&AM&A activity was robust with eight deals announced in Q1 for $33 billion. Activity expected to continue given 23 blockbuster drugs representing nearly $150 billion in 2025 sales expected to go off patent by 2030. Multiple acquisitions discussed including Gilead acquiring Arcellx and Merck's aggressive business development strategy. |
Mergers Acquisitions Patent Cliff Biosimilars Deal Activity |
GLP1Eli Lilly declined after Novo Nordisk launched oral Wegovy ahead of Lilly's oral launch. Manager maintains long-term bullish view on GLP-1 therapies becoming standard of care with $150+ billion market opportunity. Views Lilly's Mounjaro and Zepbound as best-in-class treatments. |
Obesity Diabetes Oral Injectable Weight Loss | |
AIAI concerns weighed on RadNet amid investor fears about disruptive impact on software companies. Manager believes AI will enhance rather than replace RadNet's solutions and drive internal efficiencies. For Thermo Fisher, AI expected to enable more efficient drug discovery and increase R&D investment. |
Machine Learning Drug Discovery Diagnostics Efficiency Enhancement | |
DiagnosticsStrong focus on liquid biopsy and genetic testing companies. Added Guardant Health for blood-based cancer tests with Shield colorectal screening exceeding expectations. Reacquired Natera for minimal residual disease testing. BillionToOne disrupting prenatal and oncology testing with innovative QCT technology. |
Liquid Biopsy Genetic Testing Cancer Screening Prenatal Precision Medicine | |
BiotechnologyBiotechnology funding remained strong in Q1. Portfolio includes multiple biotech names with focus on cellular therapies, novel drug development, and FcRn inhibitors. Regulatory environment favorable with FDA introducing new pathways to accelerate drug development including single pivotal Phase 3 trial requirements. |
Drug Development Cellular Therapy FDA Clinical Trials Innovation | |
| 2025 Q4 |
PharmaceuticalsHealth care holdings including pharmaceutical and biotechnology companies added meaningfully to returns. Holdings such as Roche, Novartis, and Ionis Pharmaceuticals benefited from new drug approvals, steady and growing earnings, and business models that continue to generate cash through a wide range of economic conditions. |
Pharmaceuticals Biotechnology Healthcare |
Defense SpendingDefense-related holdings such as BAE Systems and Rheinmetall had been standout performers for much of the year but fell back in Q4. While these businesses currently benefit from secular growth in defense spending around the world, share prices have moved ahead of underlying fundamentals, prompting modest trimming. |
Defense Military Aerospace | |
ValuationThe manager expresses concern about high valuations across most asset categories, particularly US equities. They note that despite international equity outperformance, the gap in valuation between US and non-US equities remains quite significant and should serve them well given their non-US-centric postures. |
Valuation Value Pricing | |
AIThe manager references excitement around artificial intelligence and its ability to dramatically impact productivity as potentially driving market exuberance. However, they cite a Bloomberg article noting that even the most profound technological revolutions aren't one-way streets to prosperity, suggesting caution about AI expectations. |
AI Technology Productivity | |
| 2025 Q3 |
BiotechnologyStrong stock selection in biotechnology contributed the vast majority of relative gains, with main drivers being argenx SE and Insmed Incorporated. The third quarter saw several positive biotechnology clinical data readouts, a strong rebound in biotechnology funding, and an acceleration in M&A activity. |
FcRn inhibitors Autoimmune Pulmonary diseases Clinical trials Drug approvals |
AIAI-driven solutions are having significant benefits on healthcare operations, particularly in diagnostic imaging. RadNet benefits from AI capabilities and operational scale, while Heartflow's AI algorithm improves with scale and data, enabling margin expansion as the company reduces employee hours in real-time workflows. |
Medical imaging Diagnostic accuracy Workflow automation Margin expansion Healthcare efficiency | |
GLP1Long term, the GLP-1 drug class is expected to become the standard of care for diabetes and obesity, ultimately representing a $150 billion-plus market. Lilly possesses the leading portfolio in this category, and GLP-1 adoption remains in the early stages with continued uptake expected to drive near doubling of Lilly's total revenues by 2030. |
Diabetes Obesity Oral therapy Market expansion Revenue growth | |
Medical DevicesThe fund maintains significant exposure to medical device companies including Boston Scientific, Intuitive Surgical, and Stryker. While facing competitive pressures in areas like pulsed field ablation, these companies continue to execute well with strong product portfolios and margin expansion opportunities. |
Surgical robotics Minimally invasive Cardiac devices Competition Innovation | |
| 2025 Q1 |
AIMarkets have become obsessed with AI leading to productivity and profitability surges since ChatGPT's release. The largest companies are investing gargantuan sums to secure AI advantages, driving extraordinary market cap increases like Nvidia's rise from $308 billion to $4.4 trillion in three years. Any disappointment on AI would leave markets vulnerable, particularly in the US. |
Artificial Intelligence Productivity Technology Nvidia ChatGPT |
InflationGlobal markets are in a classic inflationary boom with loose fiscal and monetary conditions across all major economies. Every month over the last four years inflation has been above the Federal Reserve's 2% target. The return of inflation five years ago contributed to the worst ten-year rolling return from US Treasuries on record at minus 1.3%. |
Federal Reserve Central Banks Monetary Policy Interest Rates Bonds | |
BuybacksS&P companies are generating excess cashflow and returning much of it to shareholders through share buybacks. Together with retail investor flows, $7-8 billion of liquidity flows into the US market daily. The S&P resembles a cash machine which recycles much of the cash it produces back into the market, creating perfect conditions for a bubble. |
Share Repurchases Cashflow Liquidity S&P 500 Bubble | |
GoldGold has risen by 47% year to date, reflecting the dollar's 9.9% decline and serving as a haven against potential European sovereign bond blow ups. The strong performance of gold reflects market complacency entering the final quarter of 2025. |
Haven Assets Dollar Weakness Sovereign Risk Commodities Currency | |
| 2024 Q4 |
AIOrganizations must prioritize AI investments to avoid obsolescence, with hyperscalers redirecting infrastructure spending toward AI initiatives. AI promises cost reductions and technological breakthroughs while strengthening fundamentals of mega-cap companies. The technology holds potential to double economic growth by empowering individuals and enterprises to achieve far more. |
Artificial Intelligence Data Centers Hyperscalers Infrastructure Productivity |
SemiconductorsPortfolio rotation from Micron to iShares Semiconductor ETF and addition of Lam Research reflects semiconductor exposure strategy. Circular spending within the semiconductor industry and OpenAI raises some red flags with unclear long-term repercussions. The sector remains central to AI infrastructure buildout. |
Semiconductor Equipment Memory ETFs Capex AI Infrastructure | |
RatesFed executed first rate cut to 4.00%-4.25% range amid cooling inflation and unemployment concerns, creating supportive environment for risk assets. Two additional 25bps cuts expected this year with Fed pivoting focus from inflation to labor market. Rate policy remains most important indicator for predicting global asset returns. |
Federal Reserve Interest Rates Monetary Policy Labor Market Inflation | |
| 2024 Q1 |
IndiaIndia is the world's fastest-growing major economy, on track to overtake Germany as the third-biggest by 2028. The economy shows resilience against U.S. tariffs due to its domestic consumer-driven growth model. India's goods exports to the U.S. account for just 2.2% of GDP, making the impact of 25-50% tariffs manageable. |
Domestic consumption GDP growth Economic resilience Consumer driven Emerging markets |
DefenseDefense and aerospace businesses now account for roughly 6% of portfolio capital through investments in advanced manufacturers and defense electronics suppliers. Companies are benefiting from the ongoing indigenization of India's defense/aerospace procurement, with major international contracts being awarded to Indian firms. |
Indigenization Aerospace Electronics Manufacturing Procurement | |
Trade PolicyMounting U.S. trade barriers have accelerated India's pursuit of free trade deals with other countries, including recent agreements with the UK and UAE. India hopes to finalize a larger agreement with the European Union by year-end, which would improve competitiveness of Indian exporters. |
Free trade Tariffs Export competitiveness Trade agreements Diversification | |
Small CapsCompanies with market caps below $500 million account for 56% of invested capital, up roughly 10 percentage points from last year. The portfolio's average market capitalization is just under $1 billion, down from nearly $2 billion last fall due to exits from larger-cap positions and additions to smaller-caps. |
Market capitalization Concentration Mispricing Value Positioning |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jan 23, 2026 | Fund Letters | Neal Kaufman | LLY | Eli Lilly and Company | Health Care | Pharmaceuticals | Bull | New York Stock Exchange | Diabetes, GLP-1, growth, Obesity, pharmaceuticals | Login |
| Jan 23, 2026 | Fund Letters | Neal Kaufman | ARGX | argenx SE | Health Care | Biotechnology | Bull | NASDAQ | Autoimmune, biologics, Fcrn, growth, pipeline | Login |
| Jan 23, 2026 | Fund Letters | Neal Kaufman | TEVA | Teva Pharmaceutical Industries Limited | Health Care | Pharmaceuticals | Bull | New York Stock Exchange | Brandeddrugs, innovation, Margins, pharma, turnaround | Login |
| Jan 23, 2026 | Fund Letters | Neal Kaufman | ARQQ | Arcellx, Inc. | Health Care | Biotechnology | Bull | NASDAQ | Biotech, CART, Differentiation, Myeloma, Oncology | Login |
| Jan 23, 2026 | Fund Letters | Neal Kaufman | DOCS | Doximity, Inc. | Health Care | Health Care Technology | Bear | New York Stock Exchange | advertising, Budgets, Competition, guidance, Healthtech | Login |
| Jan 23, 2026 | Fund Letters | Neal Kaufman | EHC | Encompass Health Corporation | Health Care | Health Care Facilities | Bull | New York Stock Exchange | Demographics, Healthcarefacilities, Margins, recovery, Rehabilitation | Login |
| Jan 23, 2026 | Fund Letters | Neal Kaufman | TMO | Thermo Fisher Scientific Inc. | Health Care | Life Sciences Tools & Services | Bull | New York Stock Exchange | Bioprocessing, Lifesciencestools, Margins, recovery, research | Login |
| Jan 23, 2026 | Fund Letters | Neal Kaufman | ARQT | Arcutis Biotherapeutics, Inc. | Health Care | Biotechnology | Bull | NASDAQ | Biotech, dermatology, growth, innovation, Margins | Login |
| Jan 23, 2026 | Fund Letters | Neal Kaufman | WELL | Welltower Inc. | Health Care | Health Care REITs | Bull | New York Stock Exchange | cashflow, Demographics, realestate, REITs, Seniorhousing | Login |
| Jan 23, 2026 | Fund Letters | Neal Kaufman | ELAN | Elanco Animal Health Incorporated | Health Care | Animal Health | Bull | New York Stock Exchange | Animal Health, deleveraging, growth, innovation, Margins | Login |
| Jan 23, 2026 | Fund Letters | Neal Kaufman | RGEN | Repligen Corporation | Health Care | Life Sciences Tools & Services | Bull | NASDAQ | AI, Bioprocessing, Consumables, lifesciences, Margins | Login |
| TICKER | COMMENTARY |
|---|---|
| LLY | Pharmaceutical company Eli Lilly and Company, currently best known for its diabetes and obesity GLP-1 therapies, contributed to performance as commercial execution and pipeline data reinforced investor confidence in the company's long-term leadership. All three major pharmacy benefit managers now cover Lilly's obesity portfolio, including its new daily oral GLP-1, Foundayo. This marks a reversal from last summer, when CVS Caremark provided preferred coverage for Novo Nordisk's Wegovy and raised concerns about a potential price war. The shift suggests that patients and physicians prefer Zepbound and are driving demand. Clinical trial data further reinforces our view that Lilly has one of the strongest next-generation metabolic pipelines in the industry. Phase 3 data showed retinylated delivered weight loss in the high-20% range at higher doses and nearly 20% at lower doses, while maintaining excellent tolerability. We are also excited about eloralintide, where Phase 2 data showed Zepbound-like efficacy and tolerability, with combination data expected soon. Long term, we continue to view Lilly's portfolio as the gold standard in a category that we believe can exceed $150 billion. |
| EW | Within health care equipment, lower exposure to this lagging sub-industry and solid performance from Edwards Lifesciences Corporation was a material tailwind in the period. Shares of Edwards, a medical technology company specializing in structural heart disease therapies, rose due to solid first quarter results and an updated Medicare coverage decision for transcatheter aortic valve replacement (TAVR), which has the potential to increase procedure volumes. We retain conviction as Edwards' lead in replacement therapies for mitral and tricuspid valves, which combined with a total addressable market that could approach the scale of core TAVR provides a durable and differentiated growth runway that competitors are years away from replicating. |
| GH | Guardant is a specialty diagnostics company best known for its blood-based liquid biopsy tests used in cancer therapy selection, monitoring, and screening. Shares increased following strong first-quarter results, with revenue growing 48% year-over-year due to continued adoption of the Guardant360 cancer treatment selection test and accelerating uptake of the Shield colorectal cancer blood test. Guardant360 continues to gain share within the rapidly growing liquid biopsy market, with momentum accelerating following FDA approval of the new Guardant360 Liquid CDx assay, which should qualify for Advanced Diagnostic Laboratory Test status and meaningfully expand average selling prices. Meanwhile, Shield has the potential to drive meaningful upside as adoption continues to beat expectations. Notably, the American Cancer Society recently recommended Shield in its updated colorectal cancer screening guidelines, significantly increasing the potential for expanded commercial insurance coverage. Looking ahead, we see Guardant360, Shield, and Reveal (Guardant's cancer recurrence monitoring test) positioning the company to achieve positive free cash flow over time. |
| UNH | We re-established positions in two previously owned managed care companies, UnitedHealth Group Incorporated and Elevance Health, Inc. Both companies manage diversified portfolios, providing insurance and health care services to Commercial, Exchange, Medicaid and Medicare Advantage members. We believe that the insurance cycle is turning more favorable for these companies, particularly in their Medicare Advantage businesses. After several years of elevated utilization trends, inadequate reimbursement, and regulatory challenges coupled with aggressive pricing to drive share gains, which drove operating margins to depressed levels, UnitedHealth and Elevance have exited unprofitable Medicare Advantage markets and products, right-sized benefits, and are now in the process of rebuilding profitability. We further think that the application of AI will enable them to take a significant bite out of administrative costs as well. Finally, we believe that the earnings power of both companies is well above current levels assuming they can approach their long-term target margins over the next few years. If we further assume a reasonable multiple on future earnings power, we believe there is substantial upside in both stocks. |
| ELV | We re-established positions in two previously owned managed care companies, UnitedHealth Group Incorporated and Elevance Health, Inc. Both companies manage diversified portfolios, providing insurance and health care services to Commercial, Exchange, Medicaid and Medicare Advantage members. We believe that the insurance cycle is turning more favorable for these companies, particularly in their Medicare Advantage businesses. After several years of elevated utilization trends, inadequate reimbursement, and regulatory challenges coupled with aggressive pricing to drive share gains, which drove operating margins to depressed levels, UnitedHealth and Elevance have exited unprofitable Medicare Advantage markets and products, right-sized benefits, and are now in the process of rebuilding profitability. We further think that the application of AI will enable them to take a significant bite out of administrative costs as well. Finally, we believe that the earnings power of both companies is well above current levels assuming they can approach their long-term target margins over the next few years. If we further assume a reasonable multiple on future earnings power, we believe there is substantial upside in both stocks. |
| ARGX | Biotechnology company argenx SE is best known for developing Vygart, the leading FcRn inhibitor for the treatment of autoimmune conditions. Shares rose after a period of prior weakness, which may have been partly driven by the retirement of longtime CEO Tim Van Hauwermeiren in early 2026. We view the transition to Karen Massey, who previously led the company's operations, as largely non-disruptive and believe she is well positioned to continue executing the company's strategy. Shares also benefited from optimism ahead of several clinical readouts, including data from studies of Vyvgart in immune-mediated necrotizing myopathy and dermatomyositis, expected in the third quarter of 2026, as well as empasibrupart in multifocal motor neuropathy, expected in the fourth quarter of 2026. Vyvgart continues to launch well in generalized myasthenia gravis and chronic inflammatory demyelinating polyneuropathy, where we believe it has established itself as an important treatment option. We expect Vyvgart to demonstrate efficacy across an expanding range of autoantibody-driven autoimmune conditions over time and remain encouraged by argenx's pipeline progress. |
| INSM | Insmed Incorporated is a biotechnology company with three lead pulmonology assets that we believe can collectively generate more than $8 billion in peak sales. We are particularly excited about Brinsupri for non-cystic fibrosis bronchiectasis, which we view as a $5 billion-plus opportunity. Despite what we believe has been a strong start to the launch, shares fell after first-quarter Brinsupri sales missed expectations as investors focused on early signs of higher treatment discontinuations. Insmed's exit from the Nasdaq-100 Index created additional technical selling pressure. Long term, we continue to view Brinsupri as an important treatment option for the 500,000-plus bronchiectasis patients in the U.S. We remain bullish on the portfolio's long-term fundamentals, including the opportunity for treprostinil palmitil inhalation powder (TPIP), which is being studied for pulmonary arterial hypertension and pulmonary hypertension associated with interstitial lung disease. Compared to existing inhaled prostanoids that require four daily treatments, once-daily TPIP is more convenient and can be dosed at significantly higher levels, potentially resulting in meaningfully better efficacy. |
| ISRG | Intuitive Surgical, Inc. sells robotic-assisted surgical systems. Shares declined after the company's first-quarter U.S. system placements came in below investor expectations. Medical device stocks also broadly underperformed the market amid concerns that health care utilization trends could decelerate following the expiration of Affordable Care Act (ACA) subsidies. Concerns were further compounded by the potential impact of Medicaid work requirements expected to take effect in 2027. Despite these headwinds, we believe Intuitive can continue to grow revenue at a mid-teens rate for many years and remain positive on the company's long-term growth outlook. |
| GILD | Biotechnology company Gilead Sciences, Inc. is best known for developing and commercializing therapies that treat and prevent HIV. Following a strong first-quarter advance driven by continued enthusiasm surrounding the launch of Yeztugo for HIV prevention, the stock detracted from performance in the second quarter. Shares pulled back after management issued conservative 2026 guidance in February, including expectations for approximately $800 million of Yeztugo sales, below investor expectations. Despite the more cautious outlook, we remain confident in Yeztugo's long-term opportunity. Unlike Descovy, a daily oral preventive treatment, Yeztugo is a twice-yearly injectable therapy that has the potential to significantly improve patient compliance. Looking ahead, we continue to view Gilead as a leader in HIV treatment and prevention, with Yeztugo representing an important new preventive option and a promising next-generation pipeline that includes a weekly oral lenacapavir and islatravir combination being developed with Merck & Co., Inc., as well as a wholly-owned weekly regimen incorporating a novel integrase inhibitor designed to offer a higher barrier to resistance. |
| MTD | We added to our position in Mettler-Toledo International Inc., a company we have owned in the Fund since inception. Mettler is a leading global provider of precision instruments and services. The company's products are used in key R&D, quality control, and manufacturing processes for customers in the life sciences, food, and chemicals industries, among others. We believe Mettler has multiple competitive advantages, including its strong brand, product offering and large installed base; large direct sales and service network; global supply chain; sophisticated sales and marketing programs; longstanding local presence in fast growing emerging markets; and culture of operational excellence and execution. The company has a long track record of generating consistent earnings growth. In the quarter, Mettler's organic revenue growth rate and guidance were slightly below expectations. We thought the negative stock reaction was way overblown, leading to a valuation the stock had not seen in many years. We are confident that over the long-term Mettler can generate mid-teens or better annual earnings growth. |
| JNJ | Johnson & Johnson is listed as the third largest holding in the portfolio at 5.6% of net assets with a market cap of $611.4 billion, acquired in 2025 when the market cap was $494.9 billion. |
| TMO | Thermo Fisher Scientific Inc. is listed as the fifth largest holding in the portfolio at 3.9% of net assets with a market cap of $186.3 billion, acquired in 2019 when the market cap was $117.4 billion. |
| ROIV | Roivant Sciences Ltd. is listed as the sixth largest holding in the portfolio at 3.9% of net assets with a market cap of $25.5 billion, acquired in 2025 when the market cap was $8.8 billion. |
| TEVA | Teva Pharmaceutical Industries Limited is listed as the seventh largest holding in the portfolio at 3.9% of net assets with a market cap of $39.5 billion, acquired in 2025 when the market cap was $20.3 billion. |
| WELL | Welltower Inc. is listed as the ninth largest holding in the portfolio at 3.4% of net assets with a market cap of $160.2 billion, acquired in 2025 when the market cap was $131.1 billion. The position consists of a health care REIT. |
| RDNT | RadNet, Inc. is listed as the tenth largest holding in the portfolio at 3.2% of net assets with a market cap of $4.8 billion, acquired in 2024 when the market cap was $3.4 billion. |
| RVMD | We added to our position in Revolution Medicines, Inc., a biotechnology company developing medicines to treat cancers driven by rat sarcoma (RAS) mutations. The company estimates there are 190,000 new cancer diagnoses each year in the U.S. that are driven by RAS mutations, including approximately 60,000 patients with non-small cell lung cancer, 75,000 patients with colorectal cancer, and 56,000 patients with pancreatic cancer. In April, the company released topline results from its RASolute 302 trial in which patients with advanced pancreatic cancer who received the company's medicine Daraxonrasib in the second line had a median overall survival of 13.2 months compared to 6.7 months for the patients who received chemotherapy. Subsequently at the annual meeting of the American Society of Clinical Oncology (ASCO), the clinical trial investigators presented the full data which confirmed the groundbreaking results. In this patient population, Daraxonrasib reduced the risk of death by 60% compared with chemotherapy. The presentation at ASCO received a standing ovation, which is rare in oncology and even rarer in pancreatic cancer. Daraxonrasib represents the first major advance in pancreatic cancer in over 30 years. Also, during the quarter, the company announced encouraging data from two earlier stage trials of Daraxonrasib in first-line (previously untreated) pancreatic cancer patients. The company is also studying Daraxonrasib in non-small cell lung cancer and other solid tumors and has other drugs in development, including combination therapies, for each of these cancers. When Daraxonrasib is FDA approved later this year, we think the demand will be strong, leading to rapid adoption. We think the company's leadership position in this category will be difficult to displace, and ultimately, we think the company could generate peak sales over $20 billion. |
| AZN | We reduced our positions in AstraZeneca PLC and Ionis Pharmaceuticals, Inc. due to valuation. |
| IONS | We reduced our positions in AstraZeneca PLC and Ionis Pharmaceuticals, Inc. due to valuation. |
| SYK | We sold Stryker Corporation because of concerns about slowing hospital inpatient trends and hospital capex spending due to expiration of the ACA subsidies and stricter Medicaid eligibility requirements. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
|---|---|---|---|---|---|---|
| No Recent Sells Data | ||||||
| Industry | Prev Quarter % | Current Quarter % | Change |
|---|---|---|---|
| No industry data available | |||
