Baron Funds, an investment management company, released its “Baron Health Care Fund” fourth quarter 2024 investor letter. The Fund performed roughly in line with the Benchmark, during a challenging quarter for the larger health care industry. A copy of the letter can be downloaded here. The fund declined 9.58% (Institutional Shares) in the quarter compared to a 9.75% decline for the Russell 3000 Health Care Index (benchmark) and a 2.63% gain for the Russell 3000 Index (the Index). For the full year 2024, the fund appreciated 1.55% compared to 3.48% and 23.81% gains for the indexes. In addition, please check the fund’s top five holdings to know its best picks in 2024.
In its fourth quarter 2024 investor letter, Baron Health Care Fund emphasized stocks such as HealthEquity, Inc. (NASDAQ:HQY). HealthEquity, Inc. (NASDAQ:HQY) provides financial technology solutions for healthcare and spending decisions. The one-month return of HealthEquity, Inc. (NASDAQ:HQY) was 7.18%, and its shares gained 41.58% of their value over the last 52 weeks. On February 18, 2025, HealthEquity, Inc. (NASDAQ:HQY) stock closed at $113.24 per share with a market capitalization of $9.814 billion.
Baron Health Care Fund stated the following regarding HealthEquity, Inc. (NASDAQ:HQY) in its Q4 2024 investor letter:
“We re-established a position in HealthEquity, Inc. (NASDAQ:HQY), a leading provider and custodian of health savings accounts (HSAs) and other consumer-directed benefits (CDBs). HSAs offer a way for consumers to save money in a tax advantaged manner to pay for future health care expenses. HSAs have “triple tax” benefits: (1) individuals can claim a tax deduction for contributions they make; (2) the interest or earnings on assets in the accounts accumulate without being subject to tax; and (3) distributions are tax free if they are used to pay for qualified medical expenses.
HealthEquity is one of the largest custodians of HSAs as measured by accounts and assets. As of October 31, 2024, the company had roughly 9.5 million HSAs and $30 billion in assets. The company’s competitive differentiation consists of its unique and purpose-built technology platform, integrated offering of HSAs with complementary CDBs, large and diverse distribution channel, and high level of customer service.
HealthEquity generates revenue from three sources: service fees, custodial revenue, and interchange. Service fees are paid by partners and clients for account administration services. Custodial revenue comes from interest earned on deposits placed with banks and insurance companies. The company earns interchange revenue from fees paid by merchants on payments that account holders make with a physical payment card to pay for medical expenses…” (Click here to read the full text)
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HealthEquity, Inc. (NASDAQ:HQY) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 23 hedge fund portfolios held HealthEquity, Inc. (NASDAQ:HQY) at the end of the third quarter which was 25 in the previous quarter. In the third quarter, HealthEquity, Inc. (NASDAQ:HQY) delivered double-digit year-over-year growth in nearly all key metrics. While we acknowledge the potential of HealthEquity, Inc. (NASDAQ:HQY) 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 HealthEquity, Inc. (NASDAQ:HQY) and shared the list of top health information services stocks outpacing the market in 2025. In addition, please check out our hedge fund investor letters Q4 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.