Baron Funds, an asset management firm, published its “Baron Health Care Fund” third quarter 2021 investor letter – a copy of which can be downloaded here. A return of 1.18% was delivered by the fund’s institutional shares for the third quarter of 2021, outperforming both its S&P 500 and Russell 3000 Health Care benchmarks that delivered 0.58% and 0.17% returns respectively for the same period. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
Baron Funds, in its Q3 2021 investor letter, mentioned Stevanato Group S.p.A. (NYSE: STVN) and discussed its stance on the firm. Stevanato Group S.p.A. is an Italy-based biopharmaceutical and diagnostic solutions manufacturer with a $7.5 billion market capitalization. STVN delivered a 1.12% return for the past month, and it closed at $24.31 per share on November 5, 2021.
Here is what Baron Funds has to say about Stevanato Group S.p.A. in its Q3 2021 investor letter:
“We initiated a position Stevanato Group S.p.A, a company based in Italy with a 70-year history. Stevanato is a leading provider of drug container products, such as vials and syringes, among other products and services. The company serves many of the world’s largest pharmaceutical and biotechnology companies. The company’s products are included as part of the regulatory filings for the drugs they contain, which results in high switching costs and provides recurring revenue for the life of the drug. We believe Stevanato has a stable growth business that should benefit from product mix shifts towards higher-value, higher-priced, higher-margin products such as EZ Fill (ready-to-fill products provided to customers after they have been washed, sterilized, and depryogenated), Alba (a material that reduces silicon oil particle leaks and delamination), and Nexa, a material that provides high mechanical resistance. We think the business can grow by high single-digit to low double-digit rates on the top line with EBITDA margin expanding to the high 20% range over time.”
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Based on our calculations, Stevanato Group S.p.A. (NYSE: STVN) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. Stevanato Group S.p.A. (NYSE: STVN) delivered a 17.90% return in the past 3 months.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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Disclosure: None. This article is originally published at Insider Monkey.