Baron Funds, an asset management firm, published its “Baron Discovery Fund” fourth quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly return of 3.13% was delivered by the fund’s institutional shares for the fourth quarter of 2021, which was better than the Russell 2000 Growth Index’s 0.01% return, but below the S&P 500 Index’s gain of 11.03% for the same period. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
Baron Discovery Fund, in its Q4 2021 investor letter, mentioned CareDx, Inc (NASDAQ: CDNA) and discussed its stance on the firm. CareDx, Inc is a Brisbane, California-based medicine company with a $2 billion market capitalization. CDNA delivered a -16.60% return since the beginning of the year, while its 12-month returns are down by -56.73%. The stock closed at $37.93 per share on January 20, 2022.
Here is what Baron Discovery Fund has to say about CareDx, Inc in its Q4 2021 investor letter:
“CareDx, Inc. provides transplant testing and ancillary services. The company reported strong fourth quarter earnings (it beat and raised full-year guidance), driven primarily by its kidney and heart transplant tests. It also continues to move forward with more transplant tests (liver, stem cell/bone marrow transplant, cell transplant, and lung). We believe the weak share performance in the quarter related to flattish revenue guidance in the fourth quarter driven by some holiday seasonality and the Omicron COVID variant. Additionally, some investors were concerned that average selling prices were a bit lower in the third quarter, however this reflects the company’s new lung test which is not yet reimbursed by commercial insurers (but which CareDx is running to gain share). This is typical of
diagnostic launches, and we are not concerned. There is also noise surrounding a competitor’s study data in kidney that is purported to be more accurate than CareDx’s test. While the headline number looks slightly better for the competitor, it is important to note that CareDx’s Heart Care combination test, which includes both donor-derived DNA and gene expression testing, is at least comparable to the competitor’s accuracy. Also, the full publication has not yet been released, and we have reason to believe that CareDx could successfully modify its test to be as accurate as the competitor if needed. CareDx has proven itself to be a terrific long-term partner to its customers, providing not only tests, but services to transplant centers and their patients that creates brand stickiness, and therefore competitive advantage beyond pure testing. We are not concerned by the short-term dip in the share price as CareDx still has significant market opportunity in kidney, heart, and all of its pipeline products.”
Our calculations show that CareDx, Inc (NASDAQ: CDNA) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. CDNA was in 29 hedge fund portfolios at the end of the third quarter of 2021, compared to 28 funds in the previous quarter. CareDx, Inc (NASDAQ: CDNA) delivered a -46.50% return in the past 3 months.
In November 2021, we also shared another hedge fund’s views on CDNA in another article. You can find other letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.
Disclosure: None. This article is originally published at Insider Monkey.
