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 ShockWave Medical, Inc. (NASDAQ: SWAV) and discussed its stance on the firm. ShockWave Medical, Inc. is a Santa Clara, California-based medical devices manufacturer with a $6.5 billion market capitalization. SWAV delivered an 80.23% return since the beginning of the year, while its 12-month returns are up by 241.42%. The stock closed at $185.00 per share on August 13, 2021.
Here is what Baron Funds has to say about ShockWave Medical, Inc. in its Q2 2021 investor letter:
“The Fund’s health care equipment holdings outperformed after appreciating double-digits as a group, with intravascular lithotripsy medical device manufacturer ShockWave Medical, Inc. leading the way. ShockWave’s stock price rose after management increased sales guidance for 2021 based on the strong commercial launch of its device for severely calcified coronary artery disease.”
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Based on our calculations, ShockWave Medical, Inc. (NASDAQ: SWAV) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. SWAV was in 17 hedge fund portfolios at the end of the first quarter of 2021, compared to 22 funds in the fourth quarter of 2020. ShockWave Medical, Inc. (NASDAQ: SWAV) delivered a 24.30% 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.
