Baron Funds, an investment management company, released its “Baron Discovery Fund” third quarter 2024 investor letter. A copy of the letter can be downloaded here. In the third quarter, the fund appreciated 13.55% (Institutional Shares), outperforming the 8.41% return for the Russell 2000 Growth Index. Year-to-date, the fund returned 9.50% compared to the index’s 13.22% return. The firm was pleased with the fund’s performance in the third quarter and believes that the bear market in small-cap growth stocks, which began in February 2021, may finally end. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Baron Discovery Fund highlighted stocks like Inari Medical, Inc. (NASDAQ:NARI) in the third quarter 2024 investor letter. Headquartered in Irvine, California, Inari Medical, Inc. (NASDAQ:NARI) is a medical device company that builds minimally invasive, novel, and catheter-based mechanical thrombectomy devices and accessories. The one-month return of Inari Medical, Inc. (NASDAQ:NARI) was 27.44%, and its shares gained 0.00% of their value over the last 52 weeks. On November 6, 2024, Inari Medical, Inc. (NASDAQ:NARI) stock closed at $53.27 per share with a market capitalization of $3.119 billion.
Baron Discovery Fund stated the following regarding Inari Medical, Inc. (NASDAQ:NARI) in its Q3 2024 investor letter:
“We added to our position in Inari Medical, Inc. (NASDAQ:NARI) in the quarter at what we believe are attractive valuations for a market leading medical device company. Inari offers catheter-based devices to remove clots caused by venous thromboembolism (VTE). VTE is a disease state that manifests as deep vein thrombosis (DVT), in which a clot cuts off blood flow in a deep vein (usually in the leg), and as pulmonary embolism (PE), when the clot in the leg breaks off and circulates to lodge in the blood vessels that supply the lungs. Despite beating its second quarter earnings and raising full-year guidance, Inari shares have been pressured after the release of competitor Penumbra, Inc.’s new product for DVT treatment. Both companies have very good products for DVT. We believe that there are huge opportunities for both companies to grow in DVT (by displacing other treatments), and Inari, in particular, has even bigger opportunities in PE (which it dominates) also by displacing other treatments.
PE and DVT are each markets worth about $3 billion per year (a $6 billion total market opportunity). Right now, about 80% receive just blood thinners which do nothing for existing clots, while only 20% receive any sort of more in-depth intervention. And then of this 20%, still a third are on thrombolytics, which has a high risk of bleeding and require an ICU stay for monitoring. Inari is working on studies that it believes will show superiority of its devices to using lytics or blood thinners. Its first PE study (superiority of an Inari device to using lytics) is due to read out in the fourth quarter of 2024. It has another PE study which should read out over the next couple of years that should help open up the remaining 80% of the PE market (superiority of an Inari device versus using blood thinners). In addition, Inari is at various stages of launching multiple new products (for other venous and arterial blockage conditions) which could unlock nearly $4 billion in additional addressable market opportunities. And it is launching its products in foreign markets as well. In other words, although a portion of its markets are facing increased competition, we believe there is a huge amount of overall growth opportunity that is wide open for Inari, and the stock is trading at a valuation that currently does not reflect these opportunities.”
A close-up view of a technician wearing protective gloves while installing a mechanical thrombectomy system.
Inari Medical, Inc. (NASDAQ:NARI) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 29 hedge fund portfolios held Inari Medical, Inc. (NASDAQ:NARI) at the end of the second quarter which was 24 in the previous quarter. Inari Medical, Inc. (NASDAQ:NARI) reported a record revenue of $153.4 million in the third quarter, up 21% year-over-year growth. While we acknowledge the potential of Inari Medical, Inc. (NASDAQ:NARI) 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 Inari Medical, Inc. (NASDAQ:NARI) and shared Baron Discovery Fund’s views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q3 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.