Baron Funds, an asset management firm, published its “Baron Health Care Fund” second quarter 2021 investor letter – a copy of which can be downloaded here. A return of 11.43% was delivered by the fund’s institutional shares for the Q2 of 2021, outperforming both its S&P 500 and Russell 3000 Health Care benchmarks that delivered 8.55% and 8.16% returns respectively for the same period. You can take a look at the fund’s top 5 holdings to have an idea about their top bets for 2021.
In the Q2 2021 investor letter of Baron Funds, the fund mentioned Insulet Corporation (NASDAQ: PODD) and discussed its stance on the firm. Insulet Corporation is an Acton, Massachusetts-based medical device company with a $19.8 billion market capitalization. PODD delivered a 12.49% return since the beginning of the year, while its 12-month returns are up by 42.27%. The stock closed at $287.57 per share on August 13, 2021.
Here is what Baron Funds has to say about Insulet Corporation in its Q2 2021 investor letter:
“We added to our position in Insulet Corp., which sells the OmniPod insulin pump for people with diabetes who require insulin. We think the OmniPod pump has advantages over durable pumps, including a better form factor without tubing, easier patient access through the pharmacy channel (vs. the DME channel), a superior pay-as-you-go model (no upfront cost vs. upfront 4-year contracts), and broader reimbursement in the Type 2 diabetes population. The company expects to receive FDA approval of the OmniPod 5 soon, which will be the first and only wearable, tubeless automated insulin delivery device. The wearable OmniPod 5 will communicate with the DexCom continuous glucose monitoring system, it will have an adaptive algorithm built in, and an app will allow users to control the system from a smartphone. We think the OmniPod 5 will catalyze adoption in the large and underpenetrated global market for patients with diabetes who require insulin.”
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Based on our calculations, Insulet Corporation (NASDAQ: PODD) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. PODD was in 39 hedge fund portfolios at the end of the first quarter of 2021, compared to 41 funds in the fourth quarter of 2020. Insulet Corporation (NASDAQ: PODD) delivered a 23.73% 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.
