Baron Funds, an investment management company, released its “Baron Health Care Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. The fund returned 2.54% (Institutional Shares) in the quarter compared to a 3.87% gain for the Russell 3000 Health Care Index (benchmark) and a 4.72% decline for the Russell 3000 Index (the Index). The fund trailed the benchmark due to stock selection and, to a lesser extent, active sub-industry weights. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its first-quarter 2025 investor letter, Baron Health Care Fund highlighted stocks such as UnitedHealth Group Incorporated (NYSE:UNH). UnitedHealth Group Incorporated (NYSE:UNH) is a diversified healthcare company that operates through UnitedHealthcare, Optum Health, Optum Insight, and Optum Rx segments. The one-month return of UnitedHealth Group Incorporated (NYSE:UNH) was -36.50%, and its shares lost 25.77% of their value over the last 52 weeks. On May 9, 2025, UnitedHealth Group Incorporated (NYSE:UNH) stock closed at $380.64 per share with a market capitalization of $345.29 billion.
Baron Health Care Fund stated the following regarding UnitedHealth Group Incorporated (NYSE:UNH) in its Q1 2025 investor letter:
“UnitedHealth Group Incorporated (NYSE:UNH) is a diversified health and well-being company with $450 billion in annual revenue that operates across four segments: UnitedHealthcare, Optum, OptumInsight, and OptumRX. Shares ended the quarter in positive territory as multiple 2024 headwinds began to subside and investors anticipated the start of a more positive rate cycle. After several years of rates that did not match cost trends, the preliminary 2026 Medicare Advantage rate was better than expected; historically, final rates are incrementally higher. The company is well positioned to expand enrollment as it competes against plans that aggressively mispriced in 2024, forcing them to scale back benefits to restore margins. The growing percentage of earnings from higher margin/unregulated Optum and the maturation of Medicare Advantage cohorts should help earnings in 2025. UnitedHealth’s insulation from potential tariff impacts also proved attractive to investors. We remain shareholders.
