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Baron Capital, an investment management company, released its Q1 2026 investor letter for the “Baron Health Care Fund”. A copy of the letter is available to download here. Baron Health Care Fund (the Fund) declined 6.97% (Institutional Shares) in the quarter, compared to the 4.88% decline for the Russell 3000 Health Care Index (the Benchmark) and the 3.96% decline for the Russell 3000 Index (the Index). The Fund appreciated 9.39% on an annualized basis since its inception, compared to the 8.97% gain for the Benchmark and the 13.26% gain for the Index. The disappointing stock selection drove the Fund’s underperformance in the quarter. Despite recent challenges, the Fund believes the long-term outlook for health care remains positive due to factors including an aging population, rising chronic disease rates, advances in biotechnology, and increased health care spending. In addition, please check the Fund’s top five holdings to know its best picks in 2026.
In its first-quarter 2026 investor letter, Baron Health Care Fund highlighted stocks like Roivant Sciences Ltd. (NASDAQ:ROIV) as a leading contributor. Roivant Sciences Ltd. (NASDAQ:ROIV) is a leading biopharmaceutical company that focuses on the development and commercialization of medicines and technologies. On May 1, 2026, Roivant Sciences Ltd. (NASDAQ:ROIV) closed at $27.83 per share. One-month return of Roivant Sciences Ltd. (NASDAQ:ROIV) was -0.18%, and its shares gained 140.54% over the past 52 weeks. Roivant Sciences Ltd. (NASDAQ:ROIV) has a market capitalization of $19.92 billion.
Baron Health Care Fund stated the following regarding Roivant Sciences Ltd. (NASDAQ:ROIV) in its Q1 2026 investor letter:
"Roivant Sciences Ltd. (NASDAQ:ROIV) is a biotechnology company that develops novel drugs across a range of therapeutic areas. Often, Roivant will in-license or acquire deprioritized pipeline drug assets from larger pharmaceutical companies. Each program is housed in its own standalone entity, which fosters an entrepreneurial culture while centralizing capital allocation and key resources at the parent level. We are most excited about Priovant (in partnership with Pfizer), where brepocitinib has meaningful potential across a range of rare immunological conditions, and we also see promise in Immunovant, which is developing a next-generation FcRn inhibitor for other immunological conditions. Shares rose during the quarter after Phase 2 results for brepocitinib in cutaneous sarcoidosis showed impressive efficacy, positioning the drug as the new standard of care in this setting. We believe the value of the brepocitinib franchise remains underappreciated."
Roivant Sciences Ltd. (NASDAQ:ROIV) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 52 hedge fund portfolios held Roivant Sciences Ltd. (NASDAQ:ROIV) at the end of the fourth quarter, compared to 54 in the previous quarter. While we acknowledge the potential of Roivant Sciences Ltd. (NASDAQ:ROIV) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
In another article, we covered Roivant Sciences Ltd. (NASDAQ:ROIV) and shared the list of best medical stocks to buy under $30. In addition, please check out our hedge fund investor letters Q1 2026 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.