Baron Funds, an investment management company, released its “Baron Health Care Fund” second quarter 2023 investor letter. A copy of the same can be downloaded here. The fund advanced 9.22% (Institutional Shares) in the quarter compared to a 3.44% gain for the Russell 3000 Health Care Index (benchmark) and an 8.74% gain for the S&P 500 Index. Since its inception, on April 30, 2018, the fund gained 13.58% on an annualized basis, compared to the benchmark’s 10.85% gain and the S&P 500 Index’s 12.54% return. Favorable stock selection led the fund to outperform in the quarter. Investments in biotechnology, pharmaceuticals, and healthcare equipment accounted for most of the relative gains of the fund in the quarter. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Baron Health Care Fund highlighted stocks like Merck & Co., Inc. (NYSE:MRK) in the second quarter 2023 investor letter. Headquartered in Rahway, New Jersey, Merck & Co., Inc. (NYSE:MRK) is a healthcare company that operates through Pharmaceutical and Animal Health. On July 24, 2023, Merck & Co., Inc. (NYSE:MRK) stock closed at $108.79 per share. One-month return of Merck & Co., Inc. (NYSE:MRK) was -4.00%, and its shares gained 19.17% of their value over the last 52 weeks. Merck & Co., Inc. (NYSE:MRK) has a market capitalization of $276.048 billion.
Baron Health Care Fund made the following comment about Merck & Co., Inc. (NYSE:MRK) in its second quarter 2023 investor letter:
“During the second quarter, Merck & Co., Inc. (NYSE:MRK) filed the first lawsuit (followed by the filing of additional lawsuits by other parties) against the federal government challenging the constitutionality of the Medicare Drug Price Negotiation Program (the Program) that Congress established as part of the Inflation Reduction Act. In Merck’s complaint, Merck argues that the Program violates the Fifth Amendment because it allows the federal government to take Merck’s innovative drugs without providing just compensation for them. In addition, Merck argues the Program violates the First Amendment because it forces them to sign an agreement saying the government mandated prices are fair and the result of a negotiation when in fact, Merck argues, prices are not negotiated or fair. These lawsuits will take time to work their way through the legal process and in the meantime, the Program moves ahead on its scheduled path. The consensus view is that these lawsuits will not be successful, and the Program will remain in place. We suspect Merck’s arguments may convince at least a few U.S. Supreme Court Justices when the case reaches the U.S. Supreme Court, but the ultimate outcome is impossible to predict. For now, we assume the Program will remain in place and invest with that framework in mind.”
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Merck & Co., Inc. (NYSE:MRK) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 75 hedge fund portfolios held Merck & Co., Inc. (NYSE:MRK) at the end of first quarter which was 77 in the previous quarter.
We discussed Merck & Co., Inc. (NYSE:MRK) in another article and shared the list of best low volatility stocks to buy. In addition, please check out our hedge fund investor letters Q2 2023 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.
