Baron Discovery Fund recently published its second-quarter commentary – a copy of which can be downloaded here. During the second quarter of 2021, the Baron Discovery Fund returned 6.07% (institutional shares). In comparison, the benchmark S&P 500 Index was up 8.55%, while the Russell 2000 Growth Index was up 3.92%. You should check out Baron Discovery Fund’s top 5 stock picks for investors to buy right now, which could be the biggest winners of 2021.
In the Q2 2021 Investor Letter, the fund highlighted a few stocks and CareDx Inc. (NASDAQ:CDNA) is one of them. CareDx Inc. (NASDAQ:CDNA) develops, markets, and delivers a diagnostic surveillance solution for heart transplant recipients. In the last three months, CareDx Inc. (NASDAQ:CDNA) stock lost 3%. Here is what the fund said:
“CareDx, Inc. is the market leader in transplant diagnostics, with a presence in nearly all U.S. and EU centers. One of the most amazing things about CareDx’s strategy is that while it is primarily focused on delivering terrific tests for the industry, it also provides best-in-class service for the transplant centers as well as for patients. For example, the company has mobile apps for patients to remind them of testing and medication schedules, and it has other software to help centers with transplant waiting list management and patient treatment tracking. In the quarter, the company continued to execute successfully on its growth strategy; it beat estimates and the shares responded. The company’s flagship product is cell-free DNA-oriented testing (cf-DNA) to determine whether a transplanted kidney is being subjected to biological rejection. This is a $2 billion market, and we estimate that for 2020 CareDx did about $130 million in total kidney testing revenue, up about 72% year-over-year from $74 million in 2019. For 2021, we estimate that this will grow nearly 60% to over $200 million, which would still be just 10% of the market. In addition, CareDx also has market opportunities in pre-transplant human leukocyte antigen, heart transplant testing, as well as liver and lung transplant testing. Further out on the horizon is a new test called AlloCell, which is a surveillance test for patients who have received engineered-cell transplants made from other peoples’ cells. AlloCell will monitor the effectiveness and persistence of the transplanted cells. CareDx believes that cell therapy applications for AlloCell address an incremental $5 billion market so it would be exciting if it develops as management expects. We see many years of market-leading growth for CareDx ahead.”
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Baron Fund has been a long time CareDx Inc. (NASDAQ:CDNA) bull. In February 2021, we shared Baron Fund CDNA’s thesis in this article.
In Q1 2021, the number of bullish hedge fund positions on CareDx Inc. (NASDAQ:CDNA) stock increased by about 15% from the previous quarter (see the chart here), so a number of other hedge fund managers believe in CDNA’s growth potential. Our calculations showed that CareDx Inc. (NASDAQ:CDNA) isn’t ranked among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
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Disclosure: None. This article is originally published at Insider Monkey.
