Baron Funds, an asset management firm, published its “Baron Discovery Fund” third quarter 2021 investor letter – a copy of which can be downloaded here. A decline of 5.02% was delivered by the fund’s institutional shares for the third quarter of 2021, which was 0.63% better than the Russell 2000 Growth Index (the “Benchmark”). You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.
Baron Discovery Fund, in its Q3 2021 investor letter, mentioned CareDx, Inc (NASDAQ: CDNA) and discussed its stance on the firm. CareDx, Inc is a Brisbane, California-based novel molecular diagnostics company with a $2.5 billion market capitalization. CDNA delivered a -34.44% return since the beginning of the year, while its 12-month returns are down by -17.82%. The stock closed at $47.50 per share on November 16, 2021.
Here is what Baron Funds has to say about CareDx, Inc. in its Q3 2021 investor letter:
“CareDx, Inc. provides transplant testing and ancillary services. The company reported strong second quarter earnings (it beat and raised full-year guidance), driven by its kidney and heart transplant tests. It also is moving forward with studies on more transplant tests (liver, stem cell/bone marrow transplant, cell transplant, and lung). We believe the weak share price performance was related to noise surrounding a competitor’s heart transplant test study that purported to be more accurate than CareDx’s test. While the headline number looks better for the competitor, it is important to note that CareDx’s Heart Care combination test, which includes both donor-derived DNA and gene expression testing, is comparable to the competitor’s accuracy. Also, while the full publication has not yet been released, it appears that the competitor’s testing results are from retrospective (looking back) as opposed to prospective (blind and forward looking) patient results. So, this may not be a fully “apples-toapples” comparison. The same competitor has previously had similar test data and a competitive product launch in kidney (by far the largest revenue producer for CareDx) but has still failed to garner meaningful share. CareDx has proven itself to be a terrific long-term partner to its customers, providing not only tests, but services to transplant centers and their patients which creates brand stickiness, and therefore competitive advantage beyond pure testing. We are not concerned by the short-term dip in the share price as CareDx still has significant market opportunity in kidney, heart, and all of its pipeline products.”
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Based on our calculations, CareDx, Inc (NASDAQ: CDNA) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. CDNA was in 28 hedge fund portfolios at the end of the first half of 2021, compared to 23 funds in the previous quarter. CareDx, Inc (NASDAQ: CDNA) delivered a -32.24% return in the past 3 months.
Disclosure: None. This article is originally published at Insider Monkey.
