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 ICON Public Limited Company (NASDAQ: ICLR) and discussed its stance on the firm. ICON Public Limited Company is a Dublin, Ireland-based clinical research organization company with a $21.1 billion market capitalization. ICLR delivered a 36.40% return since the beginning of the year, while its 12-month returns are up by 33.43%. The stock closed at $265.96 per share on November 5, 2021.
Here is what Baron Funds has to say about ICON Public Limited Company in its Q3 2021 investor letter:
“Investments in life sciences tools & services, pharmaceuticals, and specialized REITs and minimal exposure to lagging health care services stocks added the most value. Within life sciences tools & services, meaningfully higher exposure to this strong performing sub-industry and outperformance of contract clinical research services provider ICON Plc bolstered relative results. ICON was the top contributor after the company delivered a top-line beat and management raised 2021 guidance to incorporate the contribution of the recently acquired PRA Health Sciences, Inc.
ICON Plc is the second largest global Contract Research Organization (“CRO”) after its July merger with PRA Health Sciences. Shares of ICON, which provides outsourced drug development services to pharmaceutical and biotechnology companies, rose as investors warmed to the merger and initial concerns regarding potential disruptions receded. We remain investors. The merger brings together complementary strengths of two wellmanaged CROs, customer reception has been positive, and cost and sales synergies appear achievable.”
Based on our calculations, ICON Public Limited Company (NASDAQ: ICLR) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. ICLR was in 39 hedge fund portfolios at the end of the first half of 2021, compared to 29 funds in the previous quarter. ICON Public Limited Company (NASDAQ: ICLR) delivered a 10.02% 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.
