Baron Funds, an investment management company, released its “Baron Health Care Fund” second quarter 2024 investor letter. A copy of the letter can be downloaded here. The fund declined 2.55% (Institutional Shares) in the quarter compared to a 1.02% decline for the Russell 3000 Health Care Index (benchmark) and a 3.22% gain for the Russell 3000 Index (the Index). The underperformance in the quarter was due to active sub-industry/market cap weights. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Baron Health Care Fund highlighted stocks like Elevance Health, Inc. (NYSE:ELV) in the second quarter 2024 investor letter. Elevance Health, Inc. (NYSE:ELV) is a health benefits company. The one-month return of Elevance Health, Inc. (NYSE:ELV) was 0.36%, and its shares gained 14.91% of their value over the last 52 weeks. On August 1, 2024, Elevance Health, Inc. (NYSE:ELV) stock closed at $532.23 per share with a market capitalization of $123.417 billion.
Baron Health Care Fund stated the following regarding Elevance Health, Inc. (NYSE:ELV) in its Q2 2024 investor letter:
“We added to the position in Elevance Health, Inc. (NYSE:ELV), a leading managed care company. We think Elevance Health is well positioned to grow earnings double digits driven in part by its growing health care services business. Managed health care stocks continued to be weighed down by Medicare Advantage utilization and reimbursement concerns. Lack of near-term visibility on utilization trends was exacerbated by the Change Healthcare cyberattack, which disrupted payors’ normal utilization review and claims adjudication processes while new CMS rules are restricting the number of lower cost hospital observation stays in favor of full inpatient admissions. We believe our managed care holdings are likely to perform better in the second half of the year as investors look to 2025.
Elevance Health, Inc., with its more balanced member mix, has its own unique and unappreciated growth drivers which include the ongoing scaling of its PBM and Specialty Pharmacy and the continued growth of its Carelon Services. We note a Republican win in the upcoming election could result in a more favorable environment for Medicare Advantage companies after two years of adverse Medicare Advantage rate updates under the Biden administration.”
A medical professional working at a computer, utilizing the company’s digital solutions to improve care quality for consumers.
Elevance Health, Inc. (NYSE:ELV) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 79 hedge fund portfolios held Elevance Health, Inc. (NYSE:ELV) at the end of the first quarter which was 83 in the previous quarter. In the second quarter, Elevance Health, Inc. (NYSE:ELV) reported GAAP diluted earnings per share of $9.85 and adjusted diluted earnings per share of $10.12, up 12% year-over-year. While we acknowledge the potential of Elevance Health, Inc. (NYSE:ELV) 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 Elevance Health, Inc. (NYSE:ELV) and shared the list of best health insurance stocks to buy. In addition, please check out our hedge fund investor letters Q2 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.
