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 Veracyte, Inc. (NASDAQ:VCYT), in the second quarter 2024 investor letter. Incorporated in 2006, Veracyte, Inc. (NASDAQ:VCYT) is a diagnostics company. The one-month return of Veracyte, Inc. (NASDAQ:VCYT) was 38.95%, and its shares gained 27.74% of their value over the last 52 weeks. On August 23, 2024, Veracyte, Inc. (NASDAQ:VCYT) stock closed at $32.00 per share with a market capitalization of $2.458 billion.
Baron Discovery Fund stated the following regarding Veracyte, Inc. (NASDAQ:VCYT) in its Q2 2024 investor letter:
“Beyond the specifics of GLP-1s, the Health Care sector has generally been a minefield in small cap. Valuations for all segments in which we invest have compressed significantly. This can be seen in diagnostics. For example, since 2021 (COVID era) the multiple for Veracyte, Inc. (NASDAQ:VCYT) (a specialty cancer diagnostic company) has compressed from around 5 to 6 times EV/Sales to around 3.5 to 4 times. Veracyte has met or beat its quarterly financial guidance every quarter since the third quarter of 2020 (the prior two quarters were during peak COVID). And the company has raised full-year guidance in most of those quarters. We have increased our exposure to diagnostics companies, including existing positions in Veracyte and CareDx, Inc. (which rebounded dramatically this quarter as the company re-accelerated its top-line growth).”
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Veracyte, Inc. (NASDAQ:VCYT) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 21 hedge fund portfolios held Veracyte, Inc. (NASDAQ:VCYT) at the end of the second quarter which was 20 in the previous quarter. Veracyte, Inc. (NASDAQ:VCYT) recorded $114.4 million in second-quarter revenue, a 27% increase from Q2 2023. While we acknowledge the potential of Veracyte, Inc. (NASDAQ:VCYT) 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.
In another article, we discussed Veracyte, Inc. (NASDAQ:VCYT) and shared Artisan Small Cap Fund’s views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q2 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
